Anyone holding on to the USD?

[herd mentality]

Dollar not so weak recently.

[Vulcanl]

USD has been rallying of late and Gold has been seriously spanked.  This is nothing but a head-fake, folks! 

The latest available TIC data is fascinating:

http://www.treas.gov/tic/mfh.txt

[Rien ne va plus]

That's one mega bet the Honkies are making there.

[Vulcanl]

PP,

Yes indeed...however the point I was making is as follows:

China and other Asian countries have stopped accumulating US debt. 

It is a foregone conclusion at this point that the USD will continue to decline....this is the bet of our lifetimes, folks. 

[Vulcanl]

Wow!!!! 

Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2009/200912/20091218/article_423054.htm

Harder to buy US Treasuries
Created: 2009-12-18 0:13:35
Author:Zhou Xin and Jason Subler

IT is getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said yesterday.

The comments by Zhu Min, deputy governor of the People's Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of US government bonds.

Chinese officials generally are very careful about commenting on the dollar and Treasuries, given that so much of its US$2.3 trillion reserves are tied to their value, and markets always watch any such comments closely for signs of any shift in how it manages its assets.

China's State Administration of Foreign Exchange reaffirmed this month that the dollar stands secure as the anchor of the currency reserves it manages, even as the country seeks to diversify its investments.

In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending.

He then addressed where demand for that debt would come from.

"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."

"The US current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more US Treasuries."

China continues to see its foreign exchange reserves grow, albeit at a slower pace than in past years, due to a large trade surplus and inflows of foreign investment. They stood at US$2.3 trillion at the end of September.

Copyright © 2001-2009 Shanghai Daily Publishing House

[Hang on a sec]

That's a pretty ambiguous article; when USD is harder to buy, relative demand goes up, its value goes up. Simple supply and demand dynamics. Yet, China is intending to buy fewer USD, reducing USD demand by a huge margin. Hence USD should drop.

Conclusion: USD's value in the next year is anyone's guess.

[Vulcanl]

PP,

This is not so ambiguous to me.  Up to this point the Chinese have made no definitive statements re: what their intentions are vis a vis continuing purchases of USD based debt.

What this statement on the part of Mr. Zhu means is that China is now laying out their explanatory cover story for eventual upwards revaluation of the Yuan.

Also keep in mind that the current US administration's intention is to further devalue the USD as this suits their agenda for America's economic 'recovery.'

When you put all of the pieces together this is pretty much a done deal. 

Buy Gold, Silver, industrial metals, Oil - in short anything that gives you counter-exposure to the USD

[Vulcanl]

For those of you still having significant exposure to USD/denominated assets...it is still not too late to get out.  But you are running out of time

Dollar Share of New Reserves Dropped Last Quarter, Barclays Says
2009-12-23 22:41:25.566 GMT


By Garfield Reynolds
     Dec. 24 (Bloomberg) -- Central banks reduced purchases of
U.S. dollars in the third quarter, possibly cutting them to a
record low of less than 30 percent of new foreign-exchange
reserves, Barclays Capital said in a note to clients.
     Global central banks probably bought $50 billion in the
quarter, out of some $250 billion of reserves that were added in
the period through transactions, Barclays said, citing
calculations based on data from the International Monetary Fund
and U.S. official reports.

Link to Company News:{13347Z US <Equity> CN <GO>}

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[amazing analyst]

well i think that usd will have a tough time ahead thats for sure. i'd buy properties on the cheap in the us at low interest loans denominated in us dollar to take advantage of this downturn. i especially like properties with land that cant easily be replicated or expanded as my investment class.

if you want to play the forex game perhaps china is interesting, the challenge is that the government is non-transparent so its hard to predict new regulations that are unfriendly to investors. the second challenge in china is the spread between the poor and the risk leading to real risk of social disharmony, something which has been building up in the west and north all over 2009 and can lead to real crack downs, something which tends to hurt investors.