China dumping dollars and stockpiling copper?

[nullzero]

A 'Copper Standard' for the world's currency system?
Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.

China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.

Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.

"China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."

http://www.telegraph.co.uk/fin...s-currency-system.html

The end game is nearing with the massive debt and deficit spending, question is what will our clueless elected officials do?

 

[CLite]

Originally posted by: nullzero

A 'Copper Standard' for the world's currency system?
Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.

China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.

Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.

"China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."

http://www.telegraph.co.uk/fin...s-currency-system.html

The end game is nearing with the massive debt and deficit spending, question is what will our clueless elected officials do?

Thank god. Finally the dollar can depreciate versus the Chinese Yuan. This will make outsourcing a lot less desirable and we can finally start bringing some jobs back home.

If people actually think China will dump it fast enough to initiate a total collapse then get your tin foil hats out. Doing that would destroy the largest importer of their goods and devalue a lot of their holdings.

 

[theeedude]

Yeah, while Americans are busy selling commodities (real stuff) and hoarding dollars (stuff that can be created out of thin air by Fed) Chinese are taking full advantage of that stupidity.

 

[Craig234]

Probably one of my top three economic questions today is, when will the credit spigot be turned off? I think the economic situation becomes dramatically worse then.

 

[Genx87]

Originally posted by: CLite

Originally posted by: nullzero

A 'Copper Standard' for the world's currency system?
Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.

China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.

Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.

"China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."

http://www.telegraph.co.uk/fin...s-currency-system.html

The end game is nearing with the massive debt and deficit spending, question is what will our clueless elected officials do?

Thank god. Finally the dollar can depreciate versus the Chinese Yuan. This will make outsourcing a lot less desirable and we can finally start bringing some jobs back home.

If people actually think China will dump it fast enough to initiate a total collapse then get your tin foil hats out. Doing that would destroy the largest importer of their goods and devalue a lot of their holdings.

Did the Chinese decouple their currency from ours yet?

 

[First]

So China's going to fix the yuan to copper now? Tin-foil Libertopians unite!

 

[miketheidiot]

china may try to 'dump' its dollars, but its going to be a process that will take years, unless ofc they want to nuke they value of their investments in a firesale.

 

[OCGuy]

If this is what it takes to get federal spending under control, and keep any new programs from being implemented, so be it.

Everyone keeps saying China wont dont it.

I think we underestimate them.

 

[dullard]

Originally posted by: senseamp
Yeah, while Americans are busy selling commodities (real stuff) and hoarding dollars (stuff that can be created out of thin air by Fed) Chinese are taking full advantage of that stupidity.

It has been the opposite for decades (trade deficit). Countries have been shipping us more goods than we have shipped them, year after year after year. In exchange, they collect pieces of paper (money) which are essentially worthless IOUs since we can always print money. We all knew that one day the rest of the world would wake up. I'm not really sure that an uptick in copper consumption is a true sign that China has woken up though. It may just be that copper itself has become a good investment considering that it plummetted in price (almost 60%) and that it has significant industrial value.

 

[TastesLikeChicken]

China has their own 1/2 trillon dollar stimulus package. They are already the world's largest consumer of copper and expect they'll need even more copper when their stimulus package spending kicks into high gear. So they are stockpiling certain metals to accommodate their metal requirements for their stimulus package.

btw, where is the author's proof that China is dumping dollars? If they were it should be reflected in the currency market and I don't see any indications of such a thing. This sounds like yet another "boy cried wolf" scenario. We've been hearing this same fearmongering FUD for years now and it's really getting old.

 

[nullzero]

Tastelikechicken,

The reason why we have not seen this reflected in the bond markets is because of deflation forces, and FED intervention. When the FED does stuff like this it makes you wonder what demand is left for U.S. treasuries.
http://www.bloomberg.com/apps/...=home&sid=aPlq8GB5FWSc

The only reason we have not seen a rapid decline in value is because deflation is masking it atm, and most the world's debt is owed in USD. Once the unwinding slows or ends we will be up shit creek.

 

[theeedude]

Originally posted by: TastesLikeChicken
China has their own 1/2 trillon dollar stimulus package. They are already the world's largest consumer of copper and expect they'll need even more copper when their stimulus package spending kicks into high gear. So they are stockpiling certain metals to accommodate their metal requirements for their stimulus package.

btw, where is the author's proof that China is dumping dollars? If they were it should be reflected in the currency market and I don't see any indications of such a thing. This sounds like yet another "boy cried wolf" scenario. We've been hearing this same fearmongering FUD for years now and it's really getting old.

They aren't dumping dollars as in trading them for another currency. They are using them to buy beaten down commodities. Until the people who sold them this commodity (or future contract) go out and start spending those dollars, they aren't going to impact currency much. Now everyone is sitting on their cash, so it could be a while, meaning it's good time for China to stock up and spend some of their dollars without causing too many waves.

 

[nullzero]

Senseamp,

You are right in effect its not really dumping because there is a demand from countries like Argentina and Chile for USD to pay off debts atm. However once other countries with a surplus like Japan get in on this it could cause a rush for the door. What we should be watching as well is the recent trade agreements China has been making and dealing with that leave the USD out of the loop.

 

[wwswimming]

the average copper US penny contains approx. 3.3 grams of copper.

so, about 138 of them to a pound. when copper is $2.76 a pound, there's 2 cents
worth of copper in every copper penny, 1982 & before i think.

i wonder if they'll ever be like silver coins, where coin dealers buy & sell them for
metal value.

a year ago, copper was up to about $4 a pound.

 

[JS80]

China is screwed no matter what. They will have to take a haircut on that $2 trillion dollar reserve. The whole point of trade is to trade goods and create an equilibrium. If you keep sell sell selling your shit in turn for toilet paper, of course the value of the toilet paper will decrease.

If they think they can buy $2 trillion in commodities without the world making them pay through the nose on it, they are kidding themselves. And if they inflate commodities, global recovery slows down and their exports get fucked.

 

[Dari]

If true, I applaud this move. Somebody needs to put pressure on the dollar.

 

[gallivanter]

What was the situation with China's reserve in February?

I don't think the author of the original article knows that much about economics.

 

[First]

Originally posted by: nullzero
Tastelikechicken,

The reason why we have not seen this reflected in the bond markets is because of deflation forces, and FED intervention. When the FED does stuff like this it makes you wonder what demand is left for U.S. treasuries.
http://www.bloomberg.com/apps/...=home&sid=aPlq8GB5FWSc

The only reason we have not seen a rapid decline in value is because deflation is masking it atm, and most the world's debt is owed in USD. Once the unwinding slows or ends we will be up shit creek.

No, we won't, because you don't have the first clue that the Fed can and always has been able to significantly effect bond yields. It's why you and your ilk get laughed at with this constant nonsense about out-of-control inflation, sky-high bond yields, etc. This same fringe stuff has been parroted for years and has been wrong for years, and as always the people who parrot it bitch out when push comes to shove.

 

[Ozoned]

Originally posted by: nullzero

A 'Copper Standard' for the world's currency system?
Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.

China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.

Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.

"China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."

http://www.telegraph.co.uk/fin...s-currency-system.html

The end game is nearing with the massive debt and deficit spending, question is what will our clueless elected officials do?

Raise taxes. That'll teach them stinkin dirty chicoms.

 

[nullzero]

Evan,

You and the others are living in a fantasy where money grows off trees. We can not continue doing what we are doing with out some future crisis unfolding. You can not change the laws of mathematics. What the FED is doing now is buying the long end of treasuries to allow more debt to be taken on for the government (in effect it is becoming one of the main buyers of treasuries). This will work for a period of time until the other players decide they do not like the rules and then try to unload their treasuries back to the FED which eventually will be the only one buying.

Those who believe that this system is sustainable will be in for a rude awaking.

 

[OCGuy]

Originally posted by: nullzero
Evan,

You and the others are living in a fantasy where money grows off trees. We can not continue doing what we are doing with out some future crisis unfolding. You can not change the laws of mathematics. What the FED is doing now is buying the long end of treasuries to allow more debt to be taken on for the government (in effect it is becoming one of the main buyers of treasuries). This will work for a period of time until the other players decide they do not like the rules and then try to unload their treasuries back to the FED which eventually will be the only one buying.

Those who believe that this system is sustainable will be in for a rude awaking.

Indeed. A fiat currency + over-active printing press = collapse.

 

[Ozoned]

Originally posted by: nullzero
Evan,

You and the others are living in a fantasy where money grows off trees. We can not continue doing what we are doing with out some future crisis unfolding. You can not change the laws of mathematics. What the FED is doing now is buying the long end of treasuries to allow more debt to be taken on for the government (in effect it is becoming one of the main buyers of treasuries). This will work for a period of time until the other players decide they do not like the rules and then try to unload their treasuries back to the FED which eventually will be the only one buying.

Those who believe that this system is sustainable will be in for a rude awaking.

Especially those frickin idiots stupid enough to make the Loans to us.

 

[MovingTarget]

Heh, tell that to the fools over here stealing copper out of anything they can find to sell it for cash. :laugh:

Seriously though, I can see why they are doing so. They will keep buying dollars, but even if the dollar were still as strong as it was a long time ago, it is a bad idea to keep all your eggs in one basket. They need to diversify regardless of our economic situation. Copper seems to be a decent store of value right now...

 

[LegendKiller]

Originally posted by: OCguy

Originally posted by: nullzero
Evan,

You and the others are living in a fantasy where money grows off trees. We can not continue doing what we are doing with out some future crisis unfolding. You can not change the laws of mathematics. What the FED is doing now is buying the long end of treasuries to allow more debt to be taken on for the government (in effect it is becoming one of the main buyers of treasuries). This will work for a period of time until the other players decide they do not like the rules and then try to unload their treasuries back to the FED which eventually will be the only one buying.

Those who believe that this system is sustainable will be in for a rude awaking.

Indeed. A fiat currency + over-active printing press = collapse.

It depends on how quickly they can contract the money supply. Right now there's been a ton of dollars destroyed through asset and credit contractions.

I'd love to know the magnitude of the shift, there are no great details. This could also just be a play to sell high treasuries and buy low a commodity of known value when demand picks up again.

 

[First]

Originally posted by: nullzero
Evan,

You and the others are living in a fantasy where money grows off trees.

Uh, money does grow on trees. You know, paper and all.

We can not continue doing what we are doing with out some future crisis unfolding. You can not change the laws of mathematics. What the FED is doing now is buying the long end of treasuries to allow more debt to be taken on for the government (in effect it is becoming one of the main buyers of treasuries). This will work for a period of time until the other players decide they do not like the rules and then try to unload their treasuries back to the FED which eventually will be the only one buying.

Those who believe that this system is sustainable will be in for a rude awaking.

I'm not sure what makes you believe buying $300B in long term bonds is a bad thing. Your explanation amounts to "It's unsustainable". Why?