Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

[DaveBrown42]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

China must be producing 300 tons of gold internally by now.

Thanks for pointing that out. Sometimes I forget that gold is something that people can actually go and dig out of the ground.

[blazespinnaker]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

From Jesse's Cafe American

http://jessescrossroadscafe.blogspot...rves-into.html

"The mainland is seriously considering a plan to diversify more of its massive foreign-exchange reserves into gold, a person familiar with the situation told The Standard.

Beijing is considering changing its asset allocations during the financial tsunami in order to build up gold reserves "in a big way," the source said.

"It's the right time to increase the gold reserves, as the price is about US$710 to US$720 per ounce," said Wan Guoli, vice secretary general of the China Gold Association."

Hope you bought yours before the Chinese start to do so.


http://www.youtube.com/watch?v=3GB0f47BMak

Hmmm, yes, that would be clever. Force the value of your currency through the roof just as your retail export sector is going bust, the one that employs millions of your people.

Smart move!

Not going to happen. The world is interdependent and we all need one another.

Which is as it should be, or we'd have nuked each other to smithereens by now..

[jtabeb]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

Hmmm, yes, that would be clever. Force the value of your currency through the roof just as your retail export sector is going bust, the one that employs millions of your people.

It is very smart! You spike the value of the dollar just long enough for dollar holders to be able to trade out and into something that they want instead.

I think the play is being done by the US to let dollar holders diversify while there is high demand for dollars. ( a window of opportunity if you will).

This keeps dollar holders happy without creating a run on the dollar.

You said it, VERY SMART!

[blazespinnaker]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

Even if China did buy gold, I'm sure it'd be a long term play and they will slowly accumulate over time.

They really can't buy any significant amounts quickly that would really make a difference relative to the size of their reserves without creating huge movements in Gold.

[jtabeb]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

Even if China did buy gold, I'm sure it'd be a long term play and they will slowly accumulate over time.

They really can't buy any significant amounts quickly that would really make a difference relative to the size of their reserves without creating huge movements in Gold.

Not True, They could buy the entire stock of IMF gold and trade in their Treasuires for the gold. Which of course the IMF would sell to the US FED for USD. A closed loop system where a lot of things change but the total system does not. Would not affect the gold price nor, importantly, the treasury price, nor the value of the dollar (unless it became public information, that is).

I'll bet you a quadrillion bonars that's exactly what happens, too.

[c1ue]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

JT,

Seeing as the IMF is controlled by the US, and furthermore its 'reserves' have been used a number of times in the past for the US' purposes, why would the IMF give up its gold to China in exchange for anything dollar denominated?

[jtabeb]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

JT,

Seeing as the IMF is controlled by the US, and furthermore its 'reserves' have been used a number of times in the past for the US' purposes, why would the IMF give up its gold to China in exchange for anything dollar denominated?

As I said, it would be a "bribe" in exchange for china not dumping it's 1.8 or so Trillion in USD reserves.

[Guest]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

Wacky theory. And don't "bet a quadrillion dollars" because you'll likely lose your shirt. There is nothing remotely "of course" about this. Another thought: If you own a lot of precious metals, and you note that a lot of your theories are arguments why precious metals must soar - beware. You are engaging in "positive thesis reaffirmation". Try as an exercise to dig up reasons why gold and silver could instead plummet - locate the smartest arguments you can for those theses, and use them to test your convictions against. That way you are not just trawling for arguments which uphold the investments you've already made. It's a good way to "stress test" your most favored investment ideas.

Not True, They could buy the entire stock of IMF gold and trade in their Treasuires for the gold. Which of course the IMF would sell to the US FED for USD. A closed loop system where a lot of things change but the total system does not. Would not affect the gold price nor, importantly, the treasury price, nor the value of the dollar (unless it became public information, that is). I'll bet you a quadrillion bonars that's exactly what happens, too.

[jtabeb]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

Wacky theory. And don't "bet a quadrillion dollars" because you'll likely lose your shirt. There is nothing remotely "of course" about this. Another thought: If you own a lot of precious metals, and you note that a lot of your theories are arguments why precious metals must soar - beware. You are engaging in "positive thesis reaffirmation". Try as an exercise to dig up reasons why gold and silver could instead plummet - locate the smartest arguments you can for those theses, and use them to test your convictions against. That way you are not just trawling for arguments which uphold the investments you've already made. It's a good way to "stress test" your most favored investment ideas.

That's why the bet was for "Bonars". People were laughing at me flat out when I said I was going to go 80% PMs back in 2002-3 (who knows, it might still be deserved). But as of right now, (even with all the ups and downs) I have still way more than doubled my personal net worth. So, I'm still happy with my decisions. The Chinese are not stupid IMHO, and they will do what they can to do the best that they can.

The only real investment theory I've been operating on for the last 5-6 years is betting on what will happen before it's happened. As long as I haven't time constrained those positions, they have been winners. I'm purely a macro Guy, so I working on seeing what would be advantageous positions/solutions for the big players (HNIs, China, The Fed) to take and then betting on that outcome. Because if they are rational, (which so far, they have been) they are comming up with the same answers/positions as I am. (It's just that I postion myself before they realize it and act. thank god)

So, yes I sure am engageing in "positive thesis reaffirmation", also known as validation. People keep telling me I'm wrong and the reasons for it (which thankfully are all of a poorer quality of analysis than my own justification for initially entering into the postions in the first place). I'm the first to admit that I always get the timing wrong, that's why I don't invest in ways that require me to get the timing right. As long as my thesis is correct and my trend identification is correct, then I'm doing fine. 30% annualized compounded return since 02-03 ain't bad for buying and holding with some occaisional sales to rebalance.

"Wacky Theory" ain't the best challange to an Idea. But a couter argument as to why this would not happen would be appreciated.

I think it is VERY likely BECAUSE it is a WIN-WIN for CHINA and the US. And you'd have to find a damn good reason as to why two players would not like to engage in a mutually benificial transaction in order to have a good argument as to why this would not occur.

Good to hear from you Luke. As always, I truely appreciate your comments. (no BS, you'll note that that's a non-sarcastic emoticon. I mention that because I don't want you to misinterpret what I say or mean.)

V/R

JT

B.T.W., I'm not alone in my thinking, food for thought:

http://dharmajoint.blogspot.com/2008...nd-empire.html

[c1ue]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

JT,

Either you are being willfully ignorant, or are taking a unintended rhetorical stance (i.e. hopelessly naive).

The IMF would never sell its gold to China for the same reason a company never voluntarily sells the last share that gives someone else a controlling stake.

So long as the IMF has the gold and/or other forms of money, it is available to the US as an additional source of collateral as Dr. Michael Hudson documented in his book.

Sell the collateral - what benefit do you wind up with then?

[jtabeb]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

JT,

Either you are being willfully ignorant, or are taking a unintended rhetorical stance (i.e. hopelessly naive).

The IMF would never sell its gold to China for the same reason a company never voluntarily sells the last share that gives someone else a controlling stake.

So long as the IMF has the gold and/or other forms of money, it is available to the US as an additional source of collateral as Dr. Michael Hudson documented in his book.

Sell the collateral - what benefit do you wind up with then?

Not having them trash our economy by mass dumping of dollars perhaps?

[touchring]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

JT,

Either you are being willfully ignorant, or are taking a unintended rhetorical stance (i.e. hopelessly naive).

The IMF would never sell its gold to China for the same reason a company never voluntarily sells the last share that gives someone else a controlling stake.

So long as the IMF has the gold and/or other forms of money, it is available to the US as an additional source of collateral as Dr. Michael Hudson documented in his book.

Sell the collateral - what benefit do you wind up with then?

the chinese want oil, iron and copper. they don't want gold.

[BrianL]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

Who has the oil, iron and copper? Would they rather have gold or USD?

[jtabeb]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

Who has the oil, iron and copper? Would they rather have gold or USD?

Not to put too fine a point on it, but that IS the question, isn't it.

[Louie.G]

Re: Uh Oh! China Buying GOLD BULLION?!? Bye-Bye Miss American Dollar Pie!

the chinese want oil, iron and copper. they don't want gold.

They don't?? Would they rather have USD, I think not.

China has 600 tons of Gold. Thus they could want maybe a maximum of 3600 tons more. Cost of that is around 83 Billion USD. China's reserves are around 1.8 Trillion. That is not a large % investment in Gold, or am I missing something here??

The Chinese actually do like Gold both as an investment and to wear from what I have seen. Looking at this from a Global perspective I think JT is generally correct. Looking at it from a purely US perspective I would probably try to justify that he is wrong. So who holds the cards and which cards have yet to be played??