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China Persists In Refusing To Buy US Paper As Foreign LTM Purchases Of Treasurys Plunge To Three Year Lows

Tyler Durden's picture





 

Yesterday's TIC data held two important pieces of data. The first is that in September, the month that Bernanke launched QEternity, for the first time in 2012, foreigners were net sellers of US Treasurys, dumping a total of $17.3 billion in paper, with foreign official institutions selling $919 million and non-official "Other Foreigners" offloading a whopping $18.3 billion: a record amount for this data series! The combined outflow was a dramatic reversal from the August $42.9 billion in purchases, from the $341.8 billion in foreign purchases Year To Date, was the first outflow of 2012, the first since the $13.1 billion sold in December 2011, and finally was the biggest sale in US paper since May 2009, or the month Greece had its first (of many) bailouts. While the reason for this dramatic shift in sentiment toward US paper is not defined, perhaps a primary reason is that in September foreigners bought a whopping $23.8 billion in corporate US stocks, the most since July 2009, and certainly motivated by hope that the latest Bernanke easing would send stocks soaring. Oh how wrong they were to believe that, and to fall for the media's latest attempt to force a rotation out of bonds and into stocks.

Source: TIC

Another way to see the sudden drop off in foreign appetite for US Long-Term Treasurys is the following chart of LTM purchases by Foreigners. At $393 billion, this is the lowest total notional since November 2009.

The second, and even more troubling observation, is that in September China "added" another token $300 million in US paper, keeping its total holdings at $1155.5 billion, or a number that has remained unchanged since December 2011, when the Chinese selloff of US Treasurys concluded, which in turn took down its total from a high of $1315 billion in July 2011. So who has taken China's place as America's best oriental friend? Why that supreme basket case of all debt monetization, both foreign and domestic, Japan, which added another $8 billion in US Treasurys in September, bringing its total to $1131 billion, and just $25 billion shy of overtaking China as the biggest holder of US paper. Just because having Y1 quadrillion  in total debt of your own is not enough.

Source: TIC

For the terminal basket case that is Japan the move makes sense: since having, and monetizing a ridiculous amount of its own debt has done absolutely nothing to weaken the Yen, the Japanese financial authorities are now resorting to the last case option: monetizing others', in this case the US', debt. In doing so Japan gives a glimpse of what the next round of currency warfare, when every currency in the closed Keynesian loop has to hit bottom first or bust, will look like: central banks buying not only their own debt, but the debt of other nations, all in a desperate attempt to crush their own currencies first (except for Europe, of course, to the ECB, currency intervention means keeping the EUR high or else someone may get an idea there is redenomination risk, and proceed to do the ECB's rightful job - which is to sell the EUR - for them).

Finally, those wondering where China is reinvesting its current account surplus, the answer, at least to our readers, has been well-known for a long time.

 


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Sat, 11/17/2012 - 13:51 | Link to Comment williambanzai7
williambanzai7's picture

Please do not worry...

Sat, 11/17/2012 - 13:58 | Link to Comment prains
prains's picture

He will join the panda known as "Dick"

Sat, 11/17/2012 - 14:36 | Link to Comment Popo
Popo's picture

China to America:  "About that fiscal cliff?  Yeah.. you're going over it."

Sat, 11/17/2012 - 21:30 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

Bond vigilanties come in various forms. If the sale of US bonds to foreigners is still deemed important then at some point a sound dollar and a rejuvinated US economy will be necessary... and, we are far from either of those.

MMT is in for a real test sometime soon. Be a good boy/girl scout and prepare accordingly. You know... just in case the MMTers are wrong.

Sat, 11/17/2012 - 13:58 | Link to Comment williambanzai7
williambanzai7's picture

Sat, 11/17/2012 - 14:39 | Link to Comment onebir
onebir's picture

Would "please do not worry" fit on a nice white headband?

Sat, 11/17/2012 - 15:03 | Link to Comment helping_friendl...
helping_friendly_book's picture

I'l drink skae to that!

Sat, 11/17/2012 - 14:35 | Link to Comment AC_Doctor
AC_Doctor's picture

I am not a bond guru.  Where is the money coming (US Dollars) to pay for all these unexpected bond sales.  Could this be a black swan and is this majorly bullish or bearish for the US Dollar when our bonds are near all time low yields? 

Sat, 11/17/2012 - 14:44 | Link to Comment Urban Redneck
Urban Redneck's picture

They're called Federal Reserve Notes for a reason.

Sat, 11/17/2012 - 15:29 | Link to Comment TPTB_r_TBTF
TPTB_r_TBTF's picture

The US Dollars come from cotton and linen with a dab of ink in order to stencil in a dead president's face.

 

Disclosure:  long cotton

Sat, 11/17/2012 - 16:35 | Link to Comment Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Bernanke can print all he wants when the bond market implodes along with everything else. No one will have money for anything. The liquidity tide (deflation) goes out before the tsunami rolls in (inflation) from lack of supply as anyone who made products went bankrupt.

Sat, 11/17/2012 - 13:51 | Link to Comment A Lunatic
A Lunatic's picture

What's an account surplus?

Sat, 11/17/2012 - 14:04 | Link to Comment timbo_em
timbo_em's picture

You know, that thing that the Japanese economy used to create and which helped them to extend and pretend a little longer. But please do not worry.

Sat, 11/17/2012 - 14:19 | Link to Comment Urban Redneck
Urban Redneck's picture

One of these days some excel wizard will put together a simple graph over time showing the percentage of the total Chinese "account surplus" represented  by China's US Treasury holdings.  

Then even the retards can play along.

Sat, 11/17/2012 - 13:57 | Link to Comment VonManstein
VonManstein's picture

30 YR looks topped out on the chart. Struggling to move anywhere even with SPX down as it has been.. same for the DX. Bernanke has kneecapped the USD and pushed TSY to the limit...

The path of least resistance is down, way down. We shall see what the terminal velocity of Treasuries is.

 

Stocks to lead or follow?

Sat, 11/17/2012 - 14:15 | Link to Comment max2205
max2205's picture

Better rethink that. Ben owns the B market. Bonds near 2010 2011 highs vs the spx now

Sat, 11/17/2012 - 14:38 | Link to Comment VonManstein
VonManstein's picture

Ok. Two questions for you sir,

A) are you saying Bonds will never fall (rise) untill Ben Bond allows it to happen?

B) if Ben Bond is all powerfull why isnt the 30yr already at 160?

 

Sat, 11/17/2012 - 13:58 | Link to Comment mr. mirbach
mr. mirbach's picture

Does this signal the official start of the USD loosing World Reserve Currency status?

 

Sat, 11/17/2012 - 14:03 | Link to Comment prains
prains's picture

"loosing" sounds more like a rectal affliction from too much sangria. my wife has experienced to much "loosing" after having three kids.

Sat, 11/17/2012 - 14:14 | Link to Comment IridiumRebel
IridiumRebel's picture

 

loosing present participle of loose (Verb)

 


 

Verb:
  1. Set free; release: "the hounds have been loosed".
  2. Untie; unfasten: "the ropes were loosed".
Sat, 11/17/2012 - 16:14 | Link to Comment TPTB_r_TBTF
TPTB_r_TBTF's picture

Bretton Woods loosed the US Dollar.

Sat, 11/17/2012 - 17:44 | Link to Comment juangrande
juangrande's picture

In Prain's wife's case, that would be a dangling participle!

Sat, 11/17/2012 - 20:28 | Link to Comment prains
prains's picture

too small

Sat, 11/17/2012 - 14:16 | Link to Comment Anglo Hondo
Anglo Hondo's picture

Thanks, prains, but I really didn't need to know that.

 

Sat, 11/17/2012 - 14:08 | Link to Comment fonzannoon
fonzannoon's picture

At what point does all these tons of physical purchases begin to actually rattle the paper market?

Sat, 11/17/2012 - 15:04 | Link to Comment VonManstein
VonManstein's picture

That happend a while ago.

The volume that has been dropped on the COMEX in recent weeks has done 1/5 of what it used to last year or even spring of 2012. The Physical market has underpinned the price and blunted the attemps at causing a flush.

Second, speculative money is becoming more aware of the Physcial market and its implications. This has created a group of highly levereaged strong hands that will not sell.

Spec money will drive this market and physical demand will support it. There really isnt much downside going on here, as you may have noticed.

Sat, 11/17/2012 - 15:24 | Link to Comment Al Huxley
Al Huxley's picture

Interestingly, Comex commercial short positions actually increased this week (as of Tuesday), even as the price stayed relatively flat-down.  Normal pattern is that Comex commercial short position rises as price of gold rises (somebody has to take the short side of the momo-following spec longs) then they cover on an 'event' that triggers a sudden drop in the POG (say, somebody suddenly developing the overwhelming urge to dump 75 tons on the paper market in one fell swoop). 

 

The increase in Comex short positions on a flat week suggests to me one of two possible scenarios.

1) An even bigger price drop is coming soon, and this is just the set-up

2) The commercials are getting themselves into a deeper hole, as they're unable to break the price enough to trigger panic selling that they can cover into.

 

Normally I'd expect option 1 and be looking for a big POG smackdown this week or next, but this feels somehow different, like there's just too much demand on the long side now to make the old games possible.  We'll see...

Sat, 11/17/2012 - 15:32 | Link to Comment fonzannoon
fonzannoon's picture

thanks for the perspective guys. awesome insight.

Sat, 11/17/2012 - 16:19 | Link to Comment VonManstein
VonManstein's picture

I agree with you completely. It could go either way. In the past it has indeed gone a certain way, but i am also leaning towards tempting fate, and uttering the dreaded line... "This time it’s different"

To wait and see is all one can do.

However, to support the later case.

I think the damage that has been done to the EUR and JPY is also making it increasingly difficult for "they" to jam prices lower. If we compare charts of gold in EUR, JPY and USD we can see  the variation in performance but what is apparent is that they all put in intermediate tops and bottoms on the same day. The fact that EURgold is consolidating (over 2 months) above its break of 1300 to me says the bottom is in and sell off events will be minor. If "they" really want to bring the XAU price down much they will have to bring it down massively in EUR, this equates to a strengthening of the EUR, something that involves weakening the DXY. This is their predicament, one I would suggest has sown the seeds for new highs across the board by Q1 2013

Also, along the same lines, USD and EUR gold were in sync until the great smash. The apparent EUR strength we observed this week for whatever reason, could be the beginning of a paradigm shift, resulting from the fiscal cliff scenario, perhaps we could see the USD trade with risk more so than the EUR (the SPX and DXY have both strengthened this year and so the reverse is also a very real possibility.. in fact I’m betting on it) this would bring XAU up to the comparative EURgold level in the coming months.

They both amount to the same thing at the end of the day.

The only real way that those who chose to drop 75 tonnage of paper onto the market in 10 minutes can really bring the POG down, is to drop all the longs they hold going 100% short. This would surely collapse things massively but would leave them no longer as "commercial hedgers" as they would be completely unhedged themselves and completely vulnerable. They would have to collapse it and flip their books on a dime. Can this be done, or are the positions that they hold so intertwined with their derivative books, prop desks and interest rate swaps that this kind of nimble trade is even possible?

I doubt it but I doubt my doubts.

Anyway, my opinion is that given the tonnage dropped on the COMEX last week and given the lack of effect, we can begin to speculate that “they” are a spent force, and will have to retreat to higher ground to stage the next assault.

I am long and will not sell, that’s all that matters.

 

 

Sat, 11/17/2012 - 17:39 | Link to Comment Al Huxley
Al Huxley's picture

Good point about the price action in non-USD currencies.

Sat, 11/17/2012 - 21:27 | Link to Comment seataka
seataka's picture

Did not Germany ask for their gold back from London  and was offerred 50 Tons per year?

Sat, 11/17/2012 - 21:40 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

setaka... Last word that I read was that Germany was going to get 50 tons per year for the next 3 years for 'testing' purposes.

I doubt that this was what Germany wanted to happen when they requested their gold be returned. At the rate of 50 tons per year it would take several generations for Germany to get all of it's gold back.

Sat, 11/17/2012 - 14:12 | Link to Comment max2205
max2205's picture

Japan didn't buy anything. Ben set up a swap to make things look good.

We know Ben

Sat, 11/17/2012 - 14:15 | Link to Comment Diogenes
Diogenes's picture

Who needs foreign investors? The government prints up the bonds, sends them to the Fed, the Fed credits their account and the government writes checks on it.

THIS IS NOT MONEY PRINTING. EVERY DOLLAR OF SPENDING IS BACKED BY GOVERNMENT BONDS.

Wonder why the Chinese prefer gold?

Sun, 11/18/2012 - 07:42 | Link to Comment Amagnonx
Amagnonx's picture

Well - I was going to write the same comment :P 

 

One thing is also worth noting - they will continue to suspend reality with respect to accounting requirements - marked to fantasy for everyone (so long as you are a favored bank) and infinite credit, a specially tailored balance sheet with nothing very relevant on it.  The Feds real balance sheet is never going to be known.

 

Bank balance sheets seem to obey the same laws as quantum particles, seemingly in a mixed state of solvency and insolvency - and a genuine measurement would force insolvency.

Sat, 11/17/2012 - 14:26 | Link to Comment Future Tense
Future Tense's picture

Funds are being re-directed back into Europe, temporarily, causing the shift out of US paper for foreigners. Ultimately, it will all move at once toward gold in the end.

Sat, 11/17/2012 - 14:30 | Link to Comment The big unzip
The big unzip's picture

Japan is preparing like its May of 1945.

Sat, 11/17/2012 - 14:44 | Link to Comment scraping_by
scraping_by's picture

The last resort for Chinese Treasuries has always been to pick a fight, freeze all Chinese assets including debt, then declare it confiscated and go home. Worked for the US at the beginning of WWI, snatching up billions in German gold and other property.

However, it's been recently pointed out the Chinese have a monopoly position on the rare earths needed to make the precision magnets that guide the smart bombs and cruise missiles. Even if the PLA is a gang of doinks officered by thumbsuckers, it's going to be a short war if the US military can't use its high tech stuff.

Or, the US can become Argentina.

 

Sat, 11/17/2012 - 15:03 | Link to Comment Winston Churchill
Winston Churchill's picture

Have you ever played GO.

If you have ,you will notice the similarities in how China has been playing

the Great Game over the last four years.

They aim to win without firing a shot.

Will Pax Americana go quietly into the night ?

We are about to find out within the next couple of years.

We surely live in interesting times.

There is a reason why that's a Chinese curse.

Sat, 11/17/2012 - 16:11 | Link to Comment Divine Wind
Divine Wind's picture

 

 

An excellent game of strategy.

Sat, 11/17/2012 - 15:44 | Link to Comment TPTB_r_TBTF
TPTB_r_TBTF's picture

The US has more nukes than China has.

Sat, 11/17/2012 - 20:33 | Link to Comment Arthur Borges
Arthur Borges's picture

China has max 20 DF-5A liquid-fuel ICBMs of 1950s technology that are capable of covering the entire Continental USA; each has a one-megaton warhead; warheads are unmounted and stored in a separate facility under civilian control. There were western claims the DF-5A warheads are mirved but some analysts doubt that. There's also talk of deployment a new one -- though not the DF-31, which Chinese sources say has been abandoned.

FAS estimates the total nuclear arsenal at around 300 warheads; take away the 20 warheads above (and one or two spares) and the rest have a reach out into Russia, India, Japan and SE Asia; the biggest chunk of shorter range nukes are intended to deny attacker access to Taiwan.

(The above is summarized from readings off the website of the Federation of American Scientists, the least hysterical source I've found so far on the Internet.)

Sat, 11/17/2012 - 17:31 | Link to Comment WhiteNight123129
WhiteNight123129's picture

There is a fundamental difference between Chinese leaders and US ones. To be a leader in Politburo for the most part you have to be a trained engineer... in the US, the political class is made of Lawyers... I am in South America... good luck with the fight guys. A engineer will typically always wack a lawyer at chess, strategic games, complex problem resolution. An engineer is typically a poor public speaker but they do not give a fuck, it is not a democracy. Now there are exception for sure, guys good at everything, but unless the US brings the NASA crew to replace the white house clowns, it will be tough.

 

Sat, 11/17/2012 - 20:34 | Link to Comment Arthur Borges
Arthur Borges's picture

1. The Standing Committee works more like the UN Security Council: President Xi can't fire any co-member and decisionmaking is by consensus.

2. The new crew on the Standing Committee is weighted toward the social sciences, not engineering.

3. This tells me that whatever policy changes are made, new policy will be crafted with greater, more detailed attention to the social impact. As I keep repeating, grassroots revolt is what brings down the dynasties here and every Chinese leader knows it.

Sun, 11/18/2012 - 13:47 | Link to Comment jonjon831983
jonjon831983's picture

 

Chinese Rare Earth Element dominance may be temporary.

Since the last REE bubble (circa 2010) which was pumped by the fact that China exports something like 90% of REE`s and that they WERE restricting exports in order to "consolidate and clean up mining/refining operations", the point exposed to the general masses was that there are actually plenty of REEs out there.

The only issue of supply is the startup time required to develop a mine and refinery (ok and the sometimes toxic radioactive byproducts from refining certain types of REE "Lynas learns fate for Malaysia rare earth refinery").  In fact, it was during the 1970's when China crashed the external market by driving prices down low in a bid to generate an export market in REEs.  International mines went bust almost overnight because of the Chinese decision, but with the latest REE bubble external miners went back to the table to re-open existing mines.

 

So any perceived shortages or threat is a temporary man made in order to corner the market.  Worry only if China decides to buy up all the REE mines and refinery operations around the world... but then IF SHTF what you don't hold in hand (ie with sustainable military power), then you don't own it.  Otherwise, economics of pricing will cause supply to increase.

 

Funny thing is, my dad randomly started talking about REE's and China's dominance out of nowhere a couple months ago.  Maybe it was because of the China/Japan spat.  I had to explain the same thing, sans the nuance that REE is a general term for different elements.

 

To provide further evidence of the slightly overblown REE crisis, I dug up a conveient REE ETF.  Looking at the maximum range in 2010 when this one appears to have IPO'd (gee how convenient and kindly of them to help the common people participate in the boom) the peak was in April 2011 at around $27.94.  Current price: $11.95

 

http://finance.yahoo.com/echarts?s=REMX+Interactive#symbol=remx;range=5y...

 

Sat, 11/17/2012 - 14:46 | Link to Comment Byte Me
Byte Me's picture

Only problem that I see is:--

"What happens when/if China's economy slows and there's less surplus available to plough back into gold?"

At first flush, it looks like PRC has been supporting the bullion market as a result of its (now obvious) aversion to Treasurys. Clearly they don't bid up too much as they have a medium / long term agenda, but with Europe heading into the crapper and the USSA looking at cliff-hanging, that PRC surplus looks well vulnerable.

What then for my yellow metal value?

Sat, 11/17/2012 - 16:32 | Link to Comment kchrisc
kchrisc's picture

Byte Me,

They may or may not have a problem, but they will own the gold and have a huge manufacturing base that can be turned from export to domestic use.

The UFSA (United Fascist States of America) will be left with nothing but war and despair.

As for the gold and China, well, how's it go: "Those with the gold make the rules..."

Sat, 11/17/2012 - 15:25 | Link to Comment kevinearick
kevinearick's picture

China always jumps in at exactly the wrong time...

Afrikans vs. niggers

Sharpton is a nigger, uprooted and highly insecure, perfect fodder for the empire, which is why you see him on the empire TV broadcast. Don't show me an Americanized af spouting about democracy in a thousand dollar + suit and expect me not to use the phrase nigger traitor, when I'm talking to my partner at work, whether you are walking by or not, at a university or not.

I say the same thing about George Washington all the time. He was politically expedient just like nearly all of the other a-holes that ended up in the oval office. The critters look at me puzzled when I say it about the latter, but piss their pants when I say it about the former. What does that tell you?

I've watched these w-s operate in person at parties, but I'm just a laborer. Yes Al, the Republicans are idiots, and no one pisses their pants when you say much worse at private parties, but so are you, a kettle calling the pot black. The difference is that you have reason to know better, f-ing limousine liberal.

Middleton: A myth is a statement about society and man's place in it and the surrounding universe. Such a statement is, in general, a symbolic one, so that an important anthropological problem becomes one of understanding the reality that the statement is used to symbolize. (setting up the stack and hash)

Magesa: [T]he Dogen see the present order of the universe as a magnified projection of the original order of creation. As God is and does, so humans must be and do. The point of the myth is once again that it is because of human fault that God is now removed.

God's care and concern for humanity are demonstrated particularly when humanity faces such 'limit' experiences...Even though human beings may be the ultimate causes of these disasters. When God refuses to do these things, it is always temporary and indicates it is time for humanity to examine itself to see what it has done wrong, and then to correct its behavior and repair the damage.

Humanity is morally bound to sustain the work of God by which humanity itself is, in turn, sustained. Every creature has been endowed by God with its own force of life, its power to sustain life. Because of the common divine origin of this power, however, all creatures are connected with each other in the sense that each one influences the other.

Ibid: Nothing moves in this universe of forces without influencing other forces by its movement. The world of forces is held like a spider's web of which no single thread can be caused to vibrate without shaking the whole network. (rooted at resonance)

Young: Adapted to neocolonial realities and interpreted according to traditional sensibilities, they are rich in liberating values.

Mesaga: They have preserved for the people their identity as Africans through such massive crises as slavery and colonialism. They continue to exert a  more important and fundamental influence on African spirituality than many Christian leaders and Westernized academics care or dare to admit.

Moore: the African is used to adjusting, and needs no more than a generation or two to restructure his society according to necessity.

-----

Does that sound like an entitlement mentality to you? Is that the Africa you learned about in the media? It's certainly not what China was expecting, to bail itself and the rest of the empire out, to keep the ponzi going. Africa is another order of magnitude more complex than the middle east to the US voter, who cannot scratch the surface of the latter, but knows an authority that went to Israel and scratched a few lines out of the Bible, out of context.

Political correctness is a fatal disease inherent to central control, which is the point of free speech. The only thing worse than an insecure inbred idiot making a point to tell you a lie you have already heard 10,000 times is explicit democracy. Everything in a constitution beyond free speech is a crutch for corporations, because they lose every time.

Sat, 11/17/2012 - 15:27 | Link to Comment helping_friendl...
helping_friendly_book's picture

New leadership in China means a new ballgame for  BOC-FRBNY relations.

Sat, 11/17/2012 - 15:47 | Link to Comment yogibear
yogibear's picture

It would take a complete loss in the confidence of the US dollar to stop Bernanke and the Fed.  When people say no to the the US dollar it stops the Ponzi.  Countries need to also pull back their gold holdngs from the Federal Reserve banks.

Sat, 11/17/2012 - 16:03 | Link to Comment resurger
resurger's picture

Epic post +5

Sat, 11/17/2012 - 16:10 | Link to Comment dinastar2
dinastar2's picture

THE US $ debasement has been going on for the last 4 years, by the FED  but without long-standing solid results.The Stock exchange bubble does not reflect the state of the economy, 50% o US stocks are owned by the 1% population of the very rich.On the external , the dire need of the USA to be financed by China , is SLOWLY receding ( as you mention in your article ).The chinese are now aiming at reinforcing their currency with a solid asset like gold and are also aiming at increasing their internal consumption.But the TLT index is still up in the sky thanks to the Japanese who are just nowfollowing the debasement of their currency and accumulating more US T bonds. So alltogether the USA are still afloat and the TLT does not yet crash.It will take another 3-4 years when the japanese will have debased theyr yen ( from 78 and now only 81 down to 100 / US $ ) then ther economy will start again to expand ( mainly towards China ) to get out of the US T bonds, then who will come next ? I don't know , maybe no one so the USA will be left alone buying their own debt exactly like Japan did, BUT the big difference is that the US $ will plummet and Gold will zoom up . Europe , I guess will stick to its austerity , and that clearly indicates a higher Euro, starting as soon as the US fiscal cliff is solved ( meaning more QE in the USA )

Sat, 11/17/2012 - 16:19 | Link to Comment Atomizer
Atomizer's picture

 

 

Ring, ring ring..

Hello Tim Geithner speaking..

Hello Timmy boy, do you remember that trip you made over Yuan currency manipulation?

Yes

Repeat your success again. Suck & polish to their liking. Can we count on you Tim?

Yes

Sat, 11/17/2012 - 16:20 | Link to Comment kchrisc
kchrisc's picture

This is the funniest article and set of charts, in an ironic and tragic way, that I have ever seen.

The US government is literally selling itself and the American people to China and other foreigners. No xenophobia here, just stating the obvious fact.

The Chinese must just love it that Gold is priced in "manufactured" dollars so that they don't even have to mess with exchange rates. They can recycle the dollars into gold without any pressure on their trade exchange rate. Brilliant position if you can get it.

Now, while China is recycling their manufactured dollars into gold, the Japanese are further weakening themselves by propping up the US government further.

So the Chinese now have the gold and their historical neighbor and enemy throwing themselves over a cliff and into their waiting arms.

You can't write stranger fiction.

Sat, 11/17/2012 - 19:48 | Link to Comment djrichard
djrichard's picture

Anybody have a graph on the balance of trade vs foreign holdings of US Treasuries?   We shouldn't have to go too far back to see the pattern.

Sun, 11/18/2012 - 02:05 | Link to Comment TwoHoot
TwoHoot's picture

The balance of trade and purchas/sale of dollars (treasury notes) is equal and opposite - by definition.

Sat, 11/17/2012 - 20:06 | Link to Comment bigwavedave
bigwavedave's picture

QE is all about domestic jobs. LOL

Sat, 11/17/2012 - 21:54 | Link to Comment bunnyswanson
bunnyswanson's picture

Women everywhere in the US are struggling with what-to-do - We see the lingerie shops right beside the "Massage Parlors" and strip joints.  Daughters, wives, sisters and moms may resort to attempting to do what your avartar is doing if this keeps up.  I see new girls walking up and down the street - looking embarrassed and out of place.  It's a serious situation.

Sat, 11/17/2012 - 23:05 | Link to Comment ootofthehoos
ootofthehoos's picture

So when China's current account surplus goes to zero do they stop buying gold?

Tue, 11/20/2012 - 23:56 | Link to Comment papaclop
papaclop's picture

You rock, Tyler;

You are one of the few people in the media who really gets what's going on.   The Chinese, already the world's largest gold producer, let no gold leave their country.  In addition, I've heard reports of over 750 tons imported by China by the time this year ends.    They would dump every dollar they could if it didn't crash the markets to do so.  So, they do the next best thing, which is to invest in real money instead of intrinsically worthless paper or worse yet, just cyber digits.   If it wasn't for JP Morgan pounding the gold and silver markets both metals would be much higher.  This only serves to make it cheaper for the Chinese, who are loving JP Morgan right now.  Plus, Uncle Ben gave old JP 500 billion or so of our money after they screwed up enough to go broke.  I thought the definition of Facism was the merger of government and big business.  Especially banking.

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