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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: John McCarthy who wrote (62521)	6/2/2006 8:22:20 AM
From: John McCarthy	Read Replies (1) of 110194

Mish One more if you don't mind. There are various articles talking to how China should re-mix its reserve holdings and in effect switch out of the dollar and into gold. re: latest example financialexpress.com On the surface of it makes sense .... but what I am NOT buying about this logic is the following ... If China moved - to use an example - 1/5 of its dollar reserve into GOLD - by virtue of the 'invisible hand' it would PANIC the rest of the world's dollar holders and - in effect - decapitate (sp?) the dollar. Simply put - all other dollar reserve holders would SELL THEIR DOLLARS - (to whom?- an sucker they could find - which means themselves as a group) - and the net effect of all this - is that the VALUE of their current dollar holdings would decline dramatically versus a DO NOTHING strategy. Any thoughts on this? regards, John McCarthy

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