Friday, November 22, 2013

Latest - China To Stop Buying US Debt


For years, China has been accumulating dollars and working hard to keep the value of the dollar up and the value of the yuan down. One of the goals has been to make Chinese products less expensive in the international marketplace. But now China has announced that the time has come for it to stop stockpiling U.S. dollars. And if that does indeed turn out to be the case, than many U.S. analysts are suggesting that China could also soon stop buying any more U.S. debt...
For years, China has been systematically propping up the value of the U.S. dollar and keeping the value of the yuan artificially low. This has resulted in a massive flood of super cheap products from across the Pacific that U.S. consumers have been eagerly gobbling up.
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The People’s Bank of China said the country does not benefit any more from increases in its foreign-currency holdings, adding to signs policy makers will rein in dollar purchases that limit the yuan’s appreciation.
 
“It’s no longer in China’s favor to accumulate foreign-exchange reserves,” Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University
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It isn’t going to happen overnight, but the value of the U.S. dollar is going to start to go down, and all of that cheap stuff that you are used to buying at Wal-Mart and the dollar store is going to become a lot more expensive.

But of even more importance is what this latest move by China could mean for U.S. government debt. As most Americans have heard, we are heavily dependent on foreign nations such as China lending us money. Right now, China owns nearly 1.3 trillion dollars of our debt. Unfortunately, as CNBC is noting, if China is going to quit stockpiling our dollars than it is likely that they will stop stockpiling our debt as well…
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And just this week there was another major announcement which indicates that China is getting ready to make a major move against the U.S. dollar. According to Reuters, crude oil futures may soon be priced in yuan on the Shanghai Futures Exchange…

The Shanghai Futures Exchange (SHFE) may price its crude oil futures contract in yuan and use medium sour crude as its benchmark, its chairman said on Thursday, adding that the bourse is speeding up preparatory work to secure regulatory approvals.
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If that actually happens, that will be absolutely huge. China is the number one importer of oil in the world, and it was only a matter of time before they started to openly challenge the petrodollar.

More from Original Article

23 Countries Setting up Swap Lines to Bypass US Dollar

Here is another sign of the losing confidence of the US Dollar.  Here is an excerpt.

On Nov. 18, a former head trader for a major financial institution issued a harbinger and stated that 23 countries, and 60% of the world's GDP, are right now setting up new swap lines which bypass the dollar, SWIFT, and the BIS, and will usher in a new global currency system which will kill the dollar.
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The list of the 23 countries which are creating new swap lines outside of the dollar include China, Russia, India, and surprisingly, Germany, France, and the United Kingdom. This means that the Eurozone itself is abandoning the dollar, and preparing for transition to a new central banking system.
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One year ago, China, along with the BRICs nations of Brazil, Russia, India and South Africa, loaned money to a new financial institution they established and labeled the BRICs bank. This bank was created with the intention of bypassing the dollar, and allowing free trade to occur between nations without the need to trade for dollars first, as is currently the format under the petrodollar system. In fact, the new BRICs bank will function both as a bank of international settlement, as well as a lender of last resort, eliminating the need for the BIS and IMF, which currently reside under dollar dominion.
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What started in September of last year, when an agreement between China and Russia ended the dollar's stranglehold over oil and how it was purchased, the past 14 months have seen a momentous rush towards setting up the infrastructure to replace the dollar completely in global transactions. And with 23 countries, including those from the BRICs nations and the Eurozone, preparing for new swap lines outside of dollar hegemony, the fuse has been lit on the dollar's death rattle, and the when has changed into the now.

Friday, November 15, 2013

China is World's Top Gold Buyer

China has raced past India to become the world's top gold consumer.

Gold prices may have bottomed out earlier this year, but the precious metal hasn't lost its luster among Chinese consumers.

China has purchased 798 tonnes of the precious metal so far this year, compared to India's 715 tonnes, according to the latest World Gold Council report...

"Rising disposable incomes and a growing middle class in China is driving demand," said Albert Cheng, the World Gold Council's Far East Managing Director. "Consumers continue to invest in higher carat and heavier pieces of gold jewelery."

Gold also ranks alongside stocks and property as a favorite of investors in China, and under-performance in those markets has boosted gold, Cheng said.

Wednesday, November 6, 2013

There is No Reason to Restrict the Renminbi Globalization, says Jim Rogers

On 08 Sept 2013, at the 11th Captial Forum on the 17th China International Fair for Investment & Trade held in Xiamen, China, 
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Mr. Rogers said that “there are many wisdom and ambitions people in China, I feel very optimistic about the future of China and its currency” “The only currency I can see that is on the rise and can replace the US dollar some day is the Renminbi."...

Mr. Rogers added that China should "globalize the Renminbi in the next 20 minutes rather than the next 20 years". He thought that China is currently the world’s second largest economic entity as well as the country with most amount of foreign exchange reserve, “there is no reason to restrict the Renminbi globalization. It is good for all Chinese people, as Renminbi globalization means all investors worldwide can invest in China, which will bring great market opportunities to China’s commodities. Stock price in China will rise, China will become the world’s center for commodity transaction, China’s financial market will be the best in the world. The US dollar is a troubled currency, Renminbi globalization can’t wait too long, now it is an opportunity for it. ”
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Mr. Rogers said that “the significant decline of market value in mining industry is a very good opportunity for people who are familiar with this field. If the value drops to 10% of original value, I am going to take some actions.”