Hello Russ, <<China's diversification away from U.S. government bonds will be bad news for Washington, which has relied heavily on China's debt purchases to fund its fiscal and current-account deficits. In Asia, some economists even say Washington had it coming, suggesting that the switch is subtle retaliation for current U.S. trade pressures on Beijing.”>>
I believe the switch in policy was made a while ago …
Message 15839776
<<May 22nd, 2001
… The simpler and previously truer explanation is that the Peoples Bank of China (PBOC, central bank) had always been the only buyer of monetary gold in China, by law. As China is planning on deregulating the gold industry, continuing banking reforms, and PBOC will be a seller of monetary gold to the general population from reserve in a few years time, it is not surprising that PBOC continues to stockpile more gold than required for official reserve when the getting is still good, and make a whopper of a gain later, partly to fund banking reform, partly to fund bonuses for a past monopoly job well done.
The complicated and newer reason may be well related to the US. I think Bush rhetoric, E3, and the earlier embassy bombing, has managed to energized the PRC hawkish camp at high enough levels to push through their agenda of military preparedness based on the argument “why take a chance? And besides, it is good for the economy”. This is a difficult argument to counter for the non-hawkish camp of leadership. And so, more missiles will get built at 1/3 to ¼ the generally accepted world cost, with 1980s rocketry and avionic technologies, supplemented by the occasional internet enabled nuggets of data.
… and the impetus for implementation was augmented by the trade squabble that in turn was fueled by political necessity and the apparent paucity of easy solutions. The interconnectedness of events may blindside folks on the streets …
Message 15839776
<<May 22nd, 2001
I think gold vs. dollar vs. Euro vs. Yen, trade blocs vs. globalization, Islam vs. Christianity, Hindu vs. Islam, Israel vs. Arabs, Japan vs. Asia ex-Japan, India vs. China, Pakistan vs. India, Russia vs. EU, communism vs. capitalism vs. socialism, gun vs. butter, nuclear power vs. carbon energy, Republicans vs. Democrats, Tory vs. Labor, Marx vs. Adam Smith, inflation vs. price stability, US vs. China, China vs. Taiwan, Via vs. Intel, Legend vs. Dell, Linux vs. Windows, etc. are all dots on the same continuum of geopolitical, socioeconomic and ethnic tapestry. Any issue on this tapestry is related in every way to every other issue.>>
… leading us to the same scene in the human drama time and again, each time as refreshingly new as the last time, and as tragic and boutiful, all at the same nasty time
Message 17335557
<<April 16th, 2002
Hi Patron, <<lightening>> gold seems quite mysterious, as to its exact nature, precise function, and as in something is going on but few are certain of the entire scheme.
I do not know gold.
I do know that Central Banks and politicians are only some of the actors in the drama. Hans4Pitchers, J6P, Wang3Cups, Sake2Bottles, Jihad5Camels, and the rest of the crew from central casting will have their roles and scripts in the entire scheme.
No one knows these roles exactly, but they involve pricing, clearing levels and weights.
The overall script can be discerned from historical accounts of a play acted over and again ... curiosity, enthusiasm, euphoria, mania, disappointment, denial, panic, disillusionment, recriminations, depression, disgust, indifference, and curiosity once more.
The crowds are at the curious stage for gold once again, awaiting the lightening signal to surge forth.
All very exciting.>>
… where we can only say with conviction at any given time for a given time …
Message 17742559
<<July 16th, 2002
… I also know the PBOC (Chinese central bank) had been in conversation with EU on diversifying China's reserve allocation (previously almost all USD) to a mix of USD/Euro. This is possibly done with US agreement as the US supposedly feels that the Yuan/USD embrace may be destabilizing to the rest of the Asia trading nations, including Japan.
The above mentioned known intentions and publicized announcements act to guide the rest of the herd, just as central bank announcements on gold sales used to do, and especially given that US officialdom did not say they would intervene to support the USD.
I know enough …
It seems a question of choosing the lesser of evils ...
I believe the AUD still has quite a run ahead of it, and eventually, CAN may tag along for a ride ... Euro represent a difficult guess for me, because I do not understand the attraction other than that global investor electorates are voting for it; but this is enough to make it rise in the mean and nasty time.
An oil shock could put the jimjam into Euro works, and that is precisely what may happen.
All wild stabbing random guesses, but we are forced to play this game, or surrender our perceived freedom to choose from alternative wealth destinies.>>
… but be totally captivated by one general idea …
Message 16300985
<<September 5th, 2001
…no blind faith in Greenspankie, no fantastic bravado from 26-year old Internet consultant, and no past history of fortuitously successful central bank intervention will be able to stop what is coming to us all, because these instances of fleeting human worship, employment market mis-pricing, and accidental governmental good fortune are exactly that, fleeting, mis-priced, and accidental.
Why? Because financial gravity has grabbed onto the flaming meteor of fast vaporizing wealth, dragging it inexorably towards final destruction, dusting the bottom of the potential energy gravity well with the primordial raw material necessary for rebirth of the next abracadabra. Newton vs. Greenspan will result in an uncompromising end. You know it, feel it, and yet refuse to count on it.
The positioning of many here is infinitely (a) patient, (b) entertaining, (c) profitable, and (d) wise, when compared to the positioning of others.
Your purchasing statistics will not save the market, is not saving the market, and only but one more bump on the unstoppable ride downward in to the valley of doom. I am enjoying the show, and I hope you are enjoying the ride.>>
… and all of a sudden, out of the sunny blue sky, be seized by panic over genuine danger and be gripped by greed for even more loot
Message 19569617
<<December 7th, 2003 Hong Kong time
… Interested? Here it is.
The Taiwan-China issue, and how it may inter-play with the N.Korea thing, which together, along with developments in the ME, the twin US deficits that require J6P to borrow and rack up USD 1 trillion new obligations to be cycled back to the WAT-WOT-whatnot engaged fiscal furnace, may create opportunities, but first, panics.
My ‘thunk’ is that the USD may be positively affected and pushed into a counter-trend rally by the flight of Taiwan Dollar and perhaps even joined by private JYen holders to the traditional safety of USD, altogether augmenting Japan central bank effort to lower the JYen vs the USD, thus ripping the shorts of Buffett, Templeton, Soros and many followers to shreds, and then, once the Shorts are naked, and it becomes apparent that the traditional USD safety harbour is in fact not so safe after all due to ME matters, WAT-WOT-whatnot issues, and the ever present deficit elephants in the living room, a greater panic, but in reverse, ensues.
… and so it may be good that I think ‘ouch’ now.
… So, bottom line, I believe the USD may be a play of the season, only to be dumped shortly before Taiwan’s election or closed out soon after the same election, or rapidly unwound if the wealthy folks in Taiwan take the issue of Chen Shui-bian off the wagering table.
I cannot put my earlier described contingency plan Message 19567857 into implementation because what I am sensing is not a secular rise of the USD, but a counter-trend rally that will only make the secular fall much worse eventually.
The wood and fuel for a ferocious USD couter-trend rally of material proportions may be already piled high and soaked plenty, and the spark may be evident, and there must be plenty of shorts to be incinerated by the fantasy of multiple nuclear fires.
I am thinking as I type, and perhaps I need to do the following to my portfolio achamchen.com :
(a) Unload my HK shares and recognize the embedded gains
(b) Liquidate JYen and recognize manipulated gains
(c) Lower allocations of CAD and AUD
(d) Increase paper gold allocation %
(e) Fondle existing physical gold in storage
(f) Increase USD allocation
(g) Short ABX puts and refrain from doing same with NEM puts
(h) Remain true to existing shorted NEM covered calls
(i) Hold off pulling the trigger on the ocean view apartment
(j) Think about buying a USD call option from bank that hedges 25% of remaining non-USD currencies in portfolio
(k) Be ready to buy the panic of China/Taiwan/HK/Japan/Korean shares
(l) Be ready to sell the euphoria of USD and resident financial papers>>
Chugs, Jay |
