Not arguing - just don't know ...
but a quickie google on google news bumped me
into this .....
online.wsj.com
What I don't understand:
India just put up big for gold - using their own reserves
(I assume)
Mr. WhatsHisName hedgie recently did an "all in" on gold
but don't know what types of monies he bet with
Wait'n to see WHO buys the other 200 tons of gold from
the IMF.
from the article above
"The volatility in most commodities currencies is so high that it more than offsets any gains that you make in carry, so it's not an ideal environment right now," said Paresh Upadhyaya, who helps manage $21 billion in currencies at Putnam Investments
EDIT
Offsetting my comments ...
Nov. 17 (Bloomberg) -- The cost of borrowing in dollars for six months between banks fell below the yen rate for the first time in more than 16 years as Federal Reserve officials signaled they may keep interest rates low for longer.
The London interbank offered rate, or Libor, for six-month dollar loans fell 1 basis point to 0.506 percent today, compared with 0.516 percent for yen loans, according to data from the British Bankers’ Association. That’s the first time the dollar rate was lower than the yen rate since May 1993.
The reduced six-month rate broadens the range of U.S. assets likely to be used in the so-called carry trade, in which investors sell lower-yielding currencies for higher-yielding ones. The dollar replaced the yen as the favorite currency to use for carry trades this year after the Fed cut its benchmark interest rate to between zero and 0.25 percent in December and began buying Treasuries and mortgages-backed securities.
“Due to the low yield, the dollar is one of the main financing currencies for carry trades, especially since the trend is for a lower dollar, so you gain on both sides,” said Antje Praefcke, a currency strategist in Frankfurt at Commerzbank AG. The fact that Fed Chairman Ben S. Bernanke “said rates will continue to be low weighs on Libor rates and means the dollar will remain under pressure,” Praefcke said.
Bernanke said yesterday that “headwinds” will restrain the pace of the recovery, indicating the benchmark rate may stay at a record low for longer. Bernanke also said “significant economic challenges remain” with lending constrained and the jobless rate above 10 percent.
‘Fed Speak’
“The market is listening a bit more closely to Fed speak and that has been in favor of keeping rates low for a long period,” said David Keeble, head of fixed-income strategy in London at Calyon, the investment-banking unit of Credit Agricole SA. “Three-month Libor is virtually nothing, so with no return at the front end people are looking further up the curve.”
The central bank repeated its pledge on Nov. 4 to keep interest rates near zero for an “extended period.” Speaking in New York yesterday, Bernanke said U.S. asset prices aren’t out of line with underlying values, and central bank policy will ensure that the “dollar is strong.”
The cost to borrow in dollars for three months dropped below that of Japan’s currency on Aug. 24. Dollar borrowing costs fell below those for the yen on Sept. 7 for four-month rates and on Oct. 29 for five-month rates.
Carry Profits
Three-month dollar Libor was 4 basis points below the equivalent yen rate today. That compares with a premium of 59 basis points at the beginning of the year, and 381 basis points at the beginning of 2008.
Selling the dollar against a basket of currencies made up of the Australian and New Zealand dollars and the Norwegian krone returned more than 30 percent this year, according to Bloomberg calculations. Selling the yen earned a return of 26 percent against the same currencies.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency’s value against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell 16 percent from 89.624 on March 4, its highest level in almost three years.
The yen rose 10.9 percent against the dollar and fell 5.3 percent versus the euro in the same period.
To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net; To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net
Last Updated: November 17, 2009 11:54 EST
bloomberg.com
EDIT 2
IMF Signals Low U.S. Rates Funding ‘Carry Trade’ (Update1)
bloomberg.com
regards
John |
