Gold Trades North Of $1,420 After China's PBOC Advisor Li Says "Absurd" Dollar Is Reserve Currency

Tyler Durden's picture

Precious metals have now entered their parabolic phase. The latest catalyst for gold having traded north of $1,420 is not only the ongoing collapse of Europe via surging spreads and accelerating ECB bond monetization, which in tried and true bizarro fashion have lead to a more than 100 pip move higher in the EURUSD, but the latest speech by PBOC academic advisor Li Daokui, who said that it is "absurd" that the dollar is still the reserve currency of the world. We are confident that pretty much everyone in China agrees. The likelihood that China is about to do something big in FX land was also confirmed by the biggest move higher in the CNY which rose by 0.51%, the most since the revaluation period, and also by the high yield in the one week auction, which has led some to believe that China may be willing to hike rates once again, and further weaken the dollar peg.

From BLoomberg:

Li Daokui, an academic adviser to China’s central bank, said it could be seen as “absurd” that the dollar remains a reserve currency after the financial crisis.

To a visitor from outer space, it would seem “absurd” that the dollar holds that role, given problems in U.S. financial regulation and the country’s economic difficulties, Li said at a forum in Beijing. The same assessment could be made of the nation’s ability to keep issuing currency according to its own needs, he said.

To a visitor from outer space, it would be more absurd that after precipitating the biggest Depression in history Bernanke is still in charge of the world.

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Spitzer's picture

dollar's a joke bitchez


MarketTruth's picture

Every time i hear his name, i think of Mr. Dollar as "Ben Shalom Bukkake".

I need more cowbell's picture

No, fiats bitchez. PM's up versus ALL currencies. Don't be so dollar centric

Spitzer's picture

fuck that.

The dollar is the most overvalued, overbought, over issued joke of all time.

I need more cowbell's picture

Yeah, you're right of course, all the other fiats are rock solid, lol

SheepDog-One's picture

Fiats are Fiats...very hard to change spark plugs on!

financeguru500's picture

Do you think China has the guts to bring their currency in as the Reserve currency of the world. Or how about this, do you think the rest of the non-communist countries in the world will even consider China's currency as a reserve currency?

My guess is that just like the other day, the IMF goons will be standing by with a world currency backed by Gold. Conveniently, gold is going up as we speak which sets the stage for that very situation to occur. This will put the Rothschilds in control of the entire worlds finances.

SheepDog-One's picture

Li Daukoi says USA has great economic problems? Im sure its all just a misunderstanding as Obama says of the US voters in the last elections...all just a failure to Teleprompter communicate Im sure! US voters just too dumb to get it, China too dumb to get it.

cocoablini's picture

News flash- ALL money is fiat. Gold is FIAT. Gold is the last firewall of fiat, and has inherent value as a FIAT stable currency which is not based on credit. It's a dumb rock in the ground, and I could make polished river rocks and call them money storage too.
Money is barter of human labor and assets of value. Fiat and gold are worth something because we AGREE it stores labor credits. Once the system goes down, my Barbeque has just as much value to live on as gold.
I own gold shares, miners because when the fiat system goes to shit gold at least is the absolute bottom last ditch firewall before anarchy and road warriorism.

JohnG's picture

"Gold is FIAT."


I would suggest that you actually research what fiat currency is befor you embarras yourself furthur.


The term fiat money is used to mean:

  • any money declared by a government to be legal tender.[1]
  • state-issued money which is neither legally convertible to any other thing, nor fixed in value in terms of any objective standard.[2]
  • money without intrinsic value.[




MeTarzanUjane's picture

Something tells me the current Silver squeeze has a little to do with it also.

Turd Ferguson's picture

Tarzan, you win the prize. 

I've maintained for months that gold is following silver.

The silver Comex is broken. December delivery is an absolute nightmare for Blythe and her minions. The question is: If the silver Comex is broken, isn't the gold Comex broken, too. The answer is: YES!

There are going to be stopping points along the way. Blythe, rather predictably, set up shop at 1420. When 1420 convincingly falls, she; going to fight like hell at 1440-1450. I'd expect all kinds of craziness when we hit 1440-50...Fed statements, etc...anything to talk up the $ and reverse the PMs. It'll probably work for a few days, maybe even a week. This advance has almost gotten out of hand and our buyer(s) of size may pull their bids for a few days in the hopes of adding again at lower levels.

So, let's say we see 1440-50 by late this week. Some profit-taking and bid-pulling pushes gold back to 1390 by mid next week. IF that happens (and it may not as this thing has taken on a life of its own), buy buy buy. 1500 by 12/10/10. Jim Sinclair's 1650 by 1/11/2011 looks like a certainty.

24KGOLD FOIL HAT's picture

At least the Matrix postponed all this till after the elections, unlike 2008.  I bought all I could at end of Oct @ 1345.  Agree on a temp pullback.

thesapein's picture

Something told me the same.

Curious, why do you speak of silver in the proper form, Silver? It's kind of kewl.

John McCloy's picture

Is Charmin Ben going to have to cancel Operation Weimar or at least begin to jawbone or change around the Fed language in the next meeting hinting at a rate hike?

   I guess the facts have changed and you still have not changed your mind Ben.

EscapeKey's picture

His hands are tied. Without QE2 there will be no bidders for the treasuries.

docj's picture

Well, that's true - but it's also not Benron's problem.

It's Turbo Tax Timmy's.

spekulatn's picture

Well, that's true - but it's also not Benron's problem.

It's Turbo Tax Timmy's.


How reassuring docj.  


SheepDog-One's picture

Thats all QE2 was about, monetize our own debt as last resort as no one else is dumb enough to touch it. 

deez nutz's picture
There would be bidders if the market determined the rates.  
Ned Zeppelin's picture

Zactly. And as soon as rates are not held down artifically, and go up even modestly, look for massive TBTF implosions as asset values collapse. 

Should be bright enough to read a newspaper by at midnight.

packman's picture

His hands are tied. Without QE2 there will be no bidders for the treasuries.

Yes, there would be, just at lower prices / higher yields.  As it should be.


MachoMan's picture

There sure won't be bidders for treasuries while commodities and the stock market are launching into orbit...  can't eat your cake and have it too.

unum mountaineer's picture

ruh roh!! just another day in the neighborhood for most here at the 9-5....

Big Corked Boots's picture

When paper burns, it burns quickly.

Cognitive Dissonance's picture

Fahrenheit 451 to be exact.

I love the parallel between the book's "Firemen", who start fires rather than put them out, and Baby Back Ben, who's burning his own currency rather than protecting it.

You just can't make this shit up.

Xedus129's picture

Bradbury was very foresightful.  The televisions, the predator drones.. scary.

Central Wanker's picture

Does this mean that it is "Absurd" for China to hold such a vast amount of US Treasuries?

Timmay should learn ASAP, what is "F*ck you" in Chinese. He may hear it soon.

EscapeKey's picture

Chinese US Treasury holdings have decreased over the past year.

From 936.5bn to 868.4bn.


mark mchugh's picture

No one seems to be able to "hear" that.

unum mountaineer's picture

cào n? m?de

that's the closest I can find. I'm going to ask a cambodian feller at work later on..he's a well traveled guy..he can assist..i will be able to swear in multiple tongues
SheepDog-One's picture

Thats all China is doing now, trading their dollar debt for commodities, and that may become a losing action real soon and be the big unhinging point, where China decides to just dump it to whoever, and keep raising rates. 

cranky-old-geezer's picture

He's already hearing it.  Just ignoring it.  He'll always ignore it.  Even when China bitchslaps him and Bernanke ...and Wall Street... back to the stone age.

thefatasswilly's picture

"gan ni ma"

Translated more accurately as "fuck your mom"

umop episdn's picture

Things must be getting pretty wierd when China's PBOC dude actually says what I've been thinking. When central banksters speak truth, I worry!

Xedus129's picture

Operation Wiemar! That's great.


Dammit, meant to reply.

cossack55's picture

Again, bottom line:

PMs are enemy of the TBTF

PMs are enemy of the dollar


I'm glad I agree with 1.4 billion Chinese.

Death to the Banks (might sound better in Latin)

eigenvalue's picture

Li Daokun is not so influential as you expect. The ultimate decision to diversify China's reserves is in the hands of Hu and Wen. 

SheepDog-One's picture

If anything is said nationaly from China its been approved at the top and its what the top is also thinking. There are no Erin Burnett loose cannons in China!

I still cant believe that bimbo this morning said 'dont buy gold, its still not expensive enough yet'.

Bam_Man's picture

The ultimate in the hands of Hu and Wen.

Abbott and Costello would have had a field day with this.

Bananamerican's picture

"Hu said "dump dollars" and Wen..."

"I dunno"

"I just told you, Hu & Wen!"


"Not Wen, HU AND Wen, just now!"

"Huh? How?"

"Hau? Is that possible? ...He likes soft commodities"


jbc77's picture

I have a strange feeling we're not far off from the tipping point. A run on the dollar could quite possibly be very near.....

EscapeKey's picture

Personally I think you must be fxxxing crazy to hold Dollars. I see the daily swings in the index, and I can't for the life of me understand who buys.

But then, it's probably a case of the other currencies in the basket falling at an even faster rate.