They don't repay that amount they will get their ratings cut the trash and no one will loan them money (maybe the IMF will lol). To top it off they will need to default. The people living in these countries will be thrown into poverty like what happened to Iceland. IMF will try to clean up the mess but I doubt their is much they can do.
Yeah... Lehman's assests (at their height) were more than likely roughly equal to the entire region's GDP. I definitely don't think it will be good for the world, but at the same time I don't think I need to worry about an end to the currency markets.
Big buying from people in asia and other currencies. If you had a ton of money in polish currency what would you be doing right now? Cashing it out and getting some gold and USD.
USD and Gold moving in opposite directions? That is not what is happening right now. Funny Evan you just made yourself look very clueless.
USD trending higher in the future is not a given it is only assumed in the short term. Gold gets bought up when their is general fear going around. If you were china with massive USD reserves what would you do right now with this spike in the currency? China may very well be unloading USD to buy some gold atm.
Big buying from all currencies; in these uncertain times it appears the world has the most trust in the American system. They can buy gold in foreign markets, but they want our debt. Correct me if I'm wrong.
Gold is soaring in spite of this because while the dollar is doing great, it is a "best of the worst" scenario; IE of all the currencies to store your money, whose is the most stable. Speculators are still inflationary while the world buys up the USD, probably because of things like this stimulus package Obama is obsessed in ramming through, which is nothing but pork and barrel and is estimated to cost $200k / new job it creates. Also the current 0% interest rates. All this in light of the generally accepted analysis that there is too much cash in circulation at the moment and that deflation would be the clear free-market future. Unfortunately (or fortunately? Who can tell...), our leaders don't want an economic contraction, so injecting an _extra_ $800B into circulation when there's already [Trillions? I've heard] extra sloshing around, is concerning to many interested in stable [non-inflating] money.
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Lifer
- Jun 3, 2002
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Huh? The trend has been set, it's clear countries are finding safehaven in the dollar, makes all the sense in the world since most financial transactions are done in U.S. dollars and the weaker the dollar gets, the better the exchange rate for our domestic exporters and therefore the worse off foreign exporters are. It's in most of the world's interest, in more ways than one, to buy U.S. dollars, and therefore not in their interest to buy gold simultaneously. Since they move in exact opposite directions, and since no one fixes their currency to gold anymore and everyone is on floating rates, that's exactly why gold is only used as a hedge against dollar devaluation in portfolios nowadays. Gold has gone nowhere in 28 years, it was $850 in 1980 and is $950 today, meaning it has lost a ton of value when adjusted for inflation.
How many times does the notion that China is going to dump U.S. T-bills out onto the open market have to be debunked before you loony gold nuts will go away? It is not in their best interest to sell U.S. T-bills en masse, they'd lose money, destroy their relationship with the U.S. (and potentially other bond sellers), and it would cause havoc among their delicate middle class.
I never said China was dumping massive amounts, it only takes unloading of $1 billion or so and you could trigger a move in the gold market.
Could be...how much in cold hard cash USD do they hold? I thought they threw all of it back into Treasuries?
I think it's more likely my post above this-- USD doing well as "best of" in the list of most-likely-to-keep-your-wealth-safe, but with the stimulus package and 0% rates, inflationary concerns prevailing. Of course this is counter to the Merill Lynch article we saw on these boards recently. Who knows.
Evan,
Remember the most important rule of investing and the markets diversification
. You don't want everything in USD you want some gold reserves and other assets.
Remember the most important rule of investing and the markets diversification
. You don't want everything in USD you want some gold reserves and other assets.Bad comparison, people were still convinced in 1980 that inflation was the norm. Weren't convinced the Fed was going to keep interest rates high to defeat the inflation. I agree though, I think people are just using the gold to hedge against inflation. Whether or not China is involved with this, depends on how much free cash they have floating around-- and I doubt it's that much. You've got to remember the whole Chinese population can now purchase gold. Any inflationary concerns will now be amplified with respect to what we're used to seeing (prior to the Communist Party's lift on the ban of Chinese owning gold shares).
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Lifer
- Jun 3, 2002
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Originally posted by: nullzero
Evan,
Remember the most important rule of investing and the markets diversification
Right, but you said they'd sell $1B in U.S. dollars to buy gold (which isn't a big deal). So I'm not sure why you believe that based on the info in the OP, when fact is they already have gold.
And there's nothing wrong with China selling U.S. T-bills, all of them, gradually.
I for one am going to sleep and waking up tommorow to a world not so much removed from this one in any way whatsoever. And if it turns out I'm wrong? Well, fuck it, nothing I can do anyway, the dominoes for this have been in place long before I even cared about banks.
Originally posted by: Evan
Well, Volcker proved them wrong, now didn't he?
But hey, I have cousins who bought T-bills yielding 14% in 81, so they're sitting pretty.
Heck yeah, I for one hope we have some inflation I could use it to pay off my student debt. Save save save and when the Fed starts reigning in the inflation cash in and buy some of those crazy-yield T-bonds.
Want to watch out about gold in this range... If you already have it would not hurt to add to the position on the way up. Never know when a pullback can happen, of course we could very well break over $1k.
Last I checked frozen orbs were going for 100 gold, about the same as usual, although I got a good deal on 5 for 250 G.
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