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*China considering dropping U.S. Treasuries and Buying Gold Instead*Very Important News- Implication

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posted on Feb, 1 2009 @ 09:25 PM
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we are screwed if this happens which is why it won't happen

2nd line ^.^

3rd line >.<

4th line X.X

[edit on 2/1/09 by MoothyKnight]




posted on Feb, 2 2009 @ 02:12 AM
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reply to post by stander
 



I don't think that anyone would accept yuans as the currency of transaction....

And so the gold producers can hardly wait to see the Chinese trucks pulling up by the pit.


While over 90% of Gold trading occurs in the NY market, the Chinese can buy Gold traded in Yuan in the Asian markets e.g. The Shanghai Gold Exchange...the newer Shanghai Futures Exchange...so can member foreign banks. Interesting factoid: China outpaced South Africa in 2007, to become the worlds largest Gold producer




The private purchase of gold coins has gone down in the USA, because the credit economy doesn't leave much cash in the piggy bank.


The demand for investment grade Gold has is rising. If you visit the World Gold Council website, you can mine the specifics.

I was speaking with a large Gold dealer a month ago, his sales continue off the chart. Last Spring as Gold was approaching it's $1000+ high, his sales were led by a higher percentage of small orders (smaller investors chasing the price aka: mania). After the correction from the March highs, his sales dipped , but the transaction size increased - higher dollar volume on fewer sales (more sophisticated investors buying at lower prices). These are the people that have done enough research to understand that Gold is in a generational bull market. Corrections won't shake them out of their positions, they recognize them for what they are; buying opportunities.



but the major point is that if China really starts long-term investing in gold, the price will go up noticably.


Compared to the size of the FX market, the stock market, and the bond market, the Gold market is but a grain of sand in the parched Gobi of withering fiat currency


It doesn't take many bond-jumpers to effect dramatic moves in Gold.



There was a major increase in the price of gold that took place on January 3, 2009 -- I can see it on the chart. Do you know any reason for that?


The white candle sticks represent price rises. The January bottom was printed on the 15th. Strong move on the 23rd. No major action on the 3rd.




posted on Feb, 2 2009 @ 07:34 AM
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UPDATE ON CHINA AND TREASURY BONDS

www.nytimes.com...


China’s willingness to continue buying United States Treasury securities in large numbers will depend on its need to protect the value of its foreign investments, the Chinese premier, Wen Jiabao, said Saturday. He also said that a stable yuan is in everyone’s interests.

“Whether we will buy more U.S. Treasury bonds, and if so by how much — we should take that decision in accordance with China’s own need and also our aim to keep the security of our foreign reserves and the value of them,” Mr. Wen said.

His enigmatic remarks, made near the end of a visit to Europe, could raise new concerns about China’s commitment to continue purchasing United States government debt.




[edit on 2-2-2009 by questioningall]



posted on Feb, 2 2009 @ 08:31 AM
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reply to post by OBE1
 

As it happened, I typed in the date January 3, 2009 instead of February 3, 2009 when looking at this chart



where the price is shown ahead of time. Then I realized that relative to the fluctuations, the sudden upward movement that the chart shows is nothing out of ordinary.

In reference to the "bond jumpers": According to an article written by a guy who seems to know what he is talking about
seekingalpha.com...
the upward price trend for gold isn't caused by some bewilderment on the part of various investors looking for other opportunity to find a reliable investment in these uncertain financial times, as I thought, but it is a diversification or a complete switch that was happening in the past, and it relates to a simple parameter called "real rate." In this view, the Chinese shouldn't be an exemption, BUT if the Chinese outproduce South Africa, why would they buy gold instead of US Treasuries? Once there is an increasing demand for gold, selling gold is a logical venture. But then, what would you do with the money earned by selling gold? Buy US Treasuries?

The Chinese are still tied to communism and they can't easily invest abroad, like buying some of the US military contractors. The Chinese can't invest abroad the way the Saudis can. That reduces the options to invest, and the Chinese should make the transition to a cultural capitalism soon to avoid the piggy bank problems.

According to current prices, $2 billion buys 5,000 Fort Knox-sized gold bars. Do you know how much gold is sold each day in term of its weight? I couldn't find this type of data on the web.


sty

posted on Feb, 2 2009 @ 08:33 AM
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China wanted to buy gold in "unlimited quantities" offering double the official rate even since October 2008 . But who would give gold for $ ? !



posted on Feb, 2 2009 @ 09:51 AM
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reply to post by stander
 


China's investments in US Treasuries are just a way to invest massive amounts of money securely. US Treasuries are still the safest investment in the World. The only reason China is now wary of these investments is the lower yield that they are giving (yields are expected to rise, as investors bet on inflation taking over deflation). Essentially they are looking into "other markets". I don't believe they would ever fully drop US Treasuries, but may reduce the percent in which they commit funds.





* M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.

* M1: The total of all physical currency part of bank reserves + the amount in demand accounts ("checking" or "current" accounts).

* M2: M1 + most savings accounts, money market accounts, and small denomination time deposits (certificates of deposit of under $100,000).

* M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.




Basically.. if you add Bush's "bail out" and "commitments" to Obama's "bail outs" and future "commitments" .. it is such a large percentage of money in circulation .. that the Government does not need China to buy the treasuries to funds our ... operating costs.... we will essentially have to print the money, from the Federal Reserve. The amount of money that will be printed (if it gets, you know, actually printed) is staggering..



posted on Feb, 2 2009 @ 01:45 PM
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reply to post by Rockpuck
 

The green chart is probably M0. Since the latest 2007 amount roughly equals the economy stimulus package that Obama wants to bless America with is M0 too, then lots of folks who cash the government check will repay it later due to the inflationary effect of the green avalanche going down Mt. Rushmore.

The web is virtually deaf and mute on the inflantionary effect of the @ $800 billion stimulus. All I could find is this:
www.csmonitor.com...
www.capmag.com...

Maybe I used a naive query. There have to be more articles written by economists regarding the effects of the economic stimulus.



[edit on 2/2/2009 by stander]



posted on Feb, 2 2009 @ 04:29 PM
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reply to post by stander
 




Originally posted by stander
In reference to the "bond jumpers": According to an article written by a guy who seems to know what he is talking about
seekingalpha.com...
the upward price trend for gold isn't caused by some bewilderment on the part of various investors looking for other opportunity to find a reliable investment in these uncertain financial times, as I thought, but it is a diversification or a complete switch that was happening in the past, and it relates to a simple parameter called "real rate."


Hi stander

"the upward price trend for gold isn't caused by some bewilderment on the part of various investors looking for other opportunity to find a reliable investment in these uncertain financial times, as I thought..."

But this is precisely the reason money moves from bonds to Gold.

The author is explaining the 'fundamental' reason behind the flight out of the bonds...into Gold...the effect of a negative 'real rate of return'. The migration of $ into, or out of the debt market in relationship to Gold, is tracked by observing fluctuations in the GOLD:BOND RATIO.



Again, notice the upward progression of white candlesticks beginning around the 16th. This movement represents a change of sentiment in the bond market. We're looking at approx 3 trillion in US debt that will need to be financed within the next 6mo. The bond market is reacting to the flood of new paper soon to enter the market i.e., dilution of their Treasury holdings, dollar devaluation...looming inflation. You might re-read your article.



Once there is an increasing demand for gold, selling gold is a logical venture.


Not for an investor. Increasing demand = higher prices. With respect to supply, when Gold prices rise, it becomes cost-effective for producers to mine their lower grade ore bodies. When prices fall, they mine their higher grade resources. In other words, prices have little impact on total mine out-put.

A positive fundamental that receives little attention: The decline in global Gold production.

Gold production in ‘critical’ decline...

Peak Oil...What about Peak Gold?

GL



posted on Feb, 2 2009 @ 05:52 PM
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reply to post by stander
 


I for one would love to see 2008-2009 money supply charts. Will it go up, or down? .. these charts only cover jan-2007 .. well before the crisis began in Nov 2007



posted on Feb, 2 2009 @ 06:01 PM
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questioningall ... are you saying it's imperative people buy gold if they can because their life may depend on it when the shtf? or

are you saying gold is a really good investment at the moment for those who can afford to invest?



posted on Feb, 2 2009 @ 06:10 PM
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Originally posted by ll__raine__ll
questioningall ... are you saying it's imperative people buy gold if they can because their life may depend on it when the shtf? or

are you saying gold is a really good investment at the moment for those who can afford to invest?


Not at all, I am not telling anyone "what they should do", I think people need to listen to Peter Schiff and so on, now he "is" telling people to buy gold.

If you start doing some research, you will find out, where people should be putting their dollars right now, so they hold value later when the SHTF. Besides the reality is silver is actually better - due to the low cost in getting in, and it doesn't take much from it going up, to have increased value and more out of it.


I always advocate, people doing research themselves, for their own benefit. When I hear something, then I will research it completely and find out for myself - what the real deal is.



posted on Feb, 2 2009 @ 06:41 PM
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Please allow me one brief, but discussion-related post. With respect to Treasuries:


Treasury Real Yield at 16-Month High on Inflation Bet

Now, the bond market is saying Federal Reserve interest rates at zero percent, President Barack Obama’s $819 billion planned stimulus package and $8.5 trillion of U.S. initiatives to revive credit markets will reignite inflation.

Text


GL



posted on Feb, 3 2009 @ 01:20 PM
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Keep in mind that the FED likes to see run ups in Gold so they can then take it down. You can be sure the FED will do everything they can to protect there treasuries. This is what happened to the Saudis in the 70s. High oil prices and high inflation the Saudis were losing money due to declining purchasing power of the dollar. The US central bank advised them to go into Gold and then took the bottom out. That is why there is a lot of animosity between the US and middle east. All I am saying is that the central bankers and elite are smart. It is a suckers game. Be careful if you buy the bottom could drop. If you do buy only buy large corrections. Also it wont matter what you hold if the currency collapses. The US can confiscate gold like they did during the great depression in order to protect national security.



posted on Feb, 3 2009 @ 01:20 PM
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posted on Feb, 3 2009 @ 06:54 PM
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I would urge caution.

YES, I think that currencies are going to have trouble very shortly. But, I doubt that if China were going to switch to Gold, they'd telegraph it to raise the price BEFORE they bought it. They might telegraph to jerk our chain and keep us from NOT buying Chinese goods however -- but how they get money back on their investment in US dollars without America changing its trade policy, I don't know.

More likely, as other scares in the market have done, someone wants to raise the price and then short it.

By all means, get some gold, but don't buy it as the price rises.

The dollar, is a bit strong right now, because other countries are printing MORE than we are. Seems that dollars are relatively Scarce inside the country at the moment.



posted on Feb, 3 2009 @ 08:17 PM
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Gold mining in China
BTW, I heared that scientists have successfully gotten gold from plumbum board
by bombarding it with high energy particle, if the cost of this technique
becomes cheap in future, the gold you own will becomes worthless.


sty

posted on Feb, 4 2009 @ 04:36 AM
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reply to post by gs001
 


well, the cost of producing gold with your methods is several thousand times higher than the value of the gold itself. Long way to wait hehe, it is more likely we will be able to "fish" for gold metheorites before we make gold from led in a commercial volume..



posted on Feb, 4 2009 @ 09:16 AM
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Survivors and Those Who Win Buy Gold And Silver

We think the secret to getting through this is to hunker down, eliminate debts, keep a low profile, trade in gold and silver shares during this first quarter along with futures, and then adjust in April when stocks sell off. Gold topped out near $850 years ago. This morning, the April, 2009 futures are $908.50. We forecast 80% of the gold upside is still ahead in these markets. Silver is behind gold for now but will catch-up. They never trade like twins most of the time. We think the worst silver could do is $50; but expect much higher prices.


from link:www.kitco.com...


Congress is about to tell those foreign governments that money provided by this law can not used to buy from their citizens. Congress is telling the Chinese that this money cannot be used to buy from Chinese factories. At the same time, the U.S. government will be asking China to finance the spending authorized by the American Recovery and Reinvestment Act. While not privy to what the Chinese government will say to that hypocrisy, cannot imagine it will all be positive.



For some time the U.S. has relied on gullible foreign investors to finance the government’s deficit. As a consequence, the Federal Reserve has not had to monetize much of the U.S. government deficit, despite the size of that deficit. And it followed, therefore, that U.S. inflation was reported as modest. That situation may be on a road to change.

In the second chart is plotted the year-to-year change in U.S. government debt held by foreign central banks and the Federal Reserves. Foreign central banks, the red line, have been increasing their holdings of U.S. government debt over the entire period shown. Sometimes they did so at fairly dramatic rates. Federal Reserve, the blue line, did not need to buy that debt, and allowed its holdings to fall.

Now that situation is changing. The red line has a slight negative trend, meaning the rate of acquisition of U.S. debt by foreign institutions is slowing. At the same time, the blue line is developing a positive slope. That means Federal Reserve is now buying, or monetizing, U.S. government debt. The situation may change dramatically if the “Buy American” requirement angers foreign governments, causing them to buy less U.S. debt. Remember, the money they use to buy U.S. debt comes from trade.


above from link:www.kitco.com...



posted on Feb, 4 2009 @ 06:41 PM
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i just hope that in 2012;(the earlier the better) poleshift occurs or some rocks hit earth n blow us all up; do u or i deserve it?? no but as a whole, we deserve it... so sick ppl just NEVER #@£$$%$ learn!!!!dum $%$£ demand facts /ignore facts when its staring straight at them. wat the $£%^ is wrong with this world!!!



posted on Feb, 4 2009 @ 08:47 PM
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Bull Trap in GOLD is setting up. So far it has failed at the Oct 08 highs but it could continue to consolidate and then run up to 980 +/-25 before caving in. Watch the pivotal 830-50 area. If it fails to hold that then we could see a another run down to 700...or lower.






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