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The USD Reserve Exodus Continues - Australia Diversifies Reserves Into China

Tyler Durden's picture





 

As we have discussed numerous times over the past year, there is a quiet movement among the world's central banks to diversify their reserves away from the pejorative USD. Whether it is direct trade linkages, hording physical precious metals, or simply buying foreign sovereign debt, there is a trend emerging. The latest defection, as BusinessWeek reports, is Australia's plan to invest about 5% of foreign currency reserves in China. The decision "represents the first time that the RBA will have invested directly in a sovereign bond market of an Asian country other than Japan," the country's deputy governor noted, adding that this step was an "important milestone" to "stronger financial linkages" leaving Australia "better positioned to benefit from the shift in global economic growth towards Asia." Of course, palling up to its closest trade partner is a big driver, but in a somewhat barbed comment on the strength of the AUD, Lowe noted, "quantitative easing that has taken place in a number of countries is having a significant effect on exchange rates of freely floating currencies... which is clearly making for difficult conditions in certain parts of the Australian economy."

 

Via Bloomberg BusinessWeek,

Australia’s central bank plans to invest about 5 percent of its foreign currency reserves in China as it deepens ties with the world’s second-largest economy, Deputy Governor Philip Lowe said.

 

The decision “represents the first time that the RBA will have invested directly in a sovereign bond market of an Asian country other than Japan,” Lowe said in a speech today in Shanghai. “It reflects the broader economic relationship between China and Australia and our increasing financial ties.”

 

...

 

“By opening their capital markets to central banks like Australia’s, China is taking a step in liberalization for foreign investors,” said Martin Whetton, "... The bigger question will be if this is followed by investments from other central banks.”

 

...

 

The move is “another important milestone in deepening our financial and economic linkages with China,” Australia’s Treasurer Wayne Swan said in an emailed statement. “Strong financial linkages between our economies will ensure that Australia is even better positioned to benefit from the shift in global economic growth towards Asia.”

 

...

 

The move reflects “greater diversity of our investments”

 

The Australian dollar became the third major currency to directly trade with the yuan on April 10, after the greenback and Japan’s yen.

 

...

 

Chinese investment in Australia has risen more than five- fold since 2006 and reached about A$20 billion at the end of 2011

 

...

 

“One current example of this is related to the very high value of the Australian dollar, which is clearly making for difficult conditions in certain parts of the Australian economy,” he said. “The quantitative easing that has taken place in a number of countries is having a significant effect on exchange rates of freely floating currencies

 


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Wed, 04/24/2013 - 09:34 | Link to Comment Tinky
Tinky's picture

Good.

Wed, 04/24/2013 - 09:35 | Link to Comment Pladizow
Pladizow's picture

Sha-na-na-na-na......

Wed, 04/24/2013 - 09:39 | Link to Comment 13thWarrior
13thWarrior's picture

Meet the banksters who set gold prices.

http://www.goldfixing.com/today'sprices.htm

 

Wed, 04/24/2013 - 09:39 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

If you want to gain a deeper understanding of why the stock market is performing so well, here are some of the green shoots on the radar that long term investors and economists are analysing very closely:

  1. Record number of college educated Americans, which many top economists believe to be a major factor that will benefit America’s economy in years to come
  2. The continued subjugation of the VIX, which negates claims about a potential ‘market crash’
  3. Record low mortgage rates and a strong housing recovery
  4. Record low inflation, which leaves plenty of room for further purchase programs and monetary easing
Wed, 04/24/2013 - 09:43 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

.....or they're just printing money our of thin air and buying equities with it.

Wed, 04/24/2013 - 12:47 | Link to Comment RafterManFMJ
RafterManFMJ's picture

Occam's razor sez...

Wed, 04/24/2013 - 09:45 | Link to Comment ejmoosa
ejmoosa's picture

I have always thought I would eat more often at McDonald's if I could converse with a college graduate while waiting for my Mystery Nuggets and Fries.

Wed, 04/24/2013 - 09:48 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

That's genius, kind of like a "Hooter's" for smart, gregarious people.

Wed, 04/24/2013 - 09:53 | Link to Comment DaveyJones
DaveyJones's picture

Ah, the nuggets

that's one mystery you do not want to solve

Wed, 04/24/2013 - 10:01 | Link to Comment krispkritter
krispkritter's picture

They should be sued for false and misleading advertising for calling them 'Chicken McNuggets'.  They should be forced to rename them 'McWhat? Nuggets'  

Wed, 04/24/2013 - 10:05 | Link to Comment DaveyJones
DaveyJones's picture

they should just be sued

for calling it food

Wed, 04/24/2013 - 19:12 | Link to Comment notbot
notbot's picture

China is a train wreck.. Diversify out of the dollar? Yes. Into the Renminbi? You're joking.

You're investing in a real estate co that develops large-scale empty cities and malls, just b/c the CEO is an empire builder. 

Remind me...didn't central banks bottom tick gold?

Wed, 04/24/2013 - 10:08 | Link to Comment Bastiat
Bastiat's picture

Chicken What-the-Fuggits

Wed, 04/24/2013 - 10:21 | Link to Comment Groundhog Day
Groundhog Day's picture

I had a conversation with a former Mcdonald's employee who worked in the manufacutering facility.  His quote "the things i've seen, you couldn't pay me to eat that crap"

Wed, 04/24/2013 - 12:52 | Link to Comment Oldballplayer
Oldballplayer's picture

Parts is parts....

Wed, 04/24/2013 - 09:49 | Link to Comment DaveyJones
DaveyJones's picture

MDB you're sarcasm is brilliant

what scares the shit out of me is that you sound exactly like my television

Wed, 04/24/2013 - 10:17 | Link to Comment azzhatter
azzhatter's picture

I've wondered if MDB is secretly a CNBC employee?

Wed, 04/24/2013 - 10:45 | Link to Comment Rustysilver
Rustysilver's picture

azzhatter,

He works for the White House: or he's a moron. Sorry for being redundant.

Wed, 04/24/2013 - 10:19 | Link to Comment gtb
gtb's picture

You won't be scared if you turn off the TV and quit reading his crap.

Wed, 04/24/2013 - 09:53 | Link to Comment Dangertime
Dangertime's picture

Don't forget record defaults on college loans.

 

And record low inflation...Gas from .99 cents to $3.85 a gallon in 13 years.  Gotta love low inflation.

Wed, 04/24/2013 - 09:56 | Link to Comment DaveyJones
DaveyJones's picture

don't worry energy is an inconsequential discretionary commodity

it's not like people kill for it.

Wed, 04/24/2013 - 09:58 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

MDB, yes, I see the strong housing recovery. People around here are, as soon as they think they're "even," put their house up for sale and bolt to a rental unit. This trend should continue until the 3% down FHA suckers default and the wash, rinse, repeat cycle starts all over again.

Recovery now. Insolvency later.

Wed, 04/24/2013 - 10:15 | Link to Comment Go Tribe
Go Tribe's picture

1. Bubble

2. Bubble

3. Bubble

4. Bubble

Wed, 04/24/2013 - 11:09 | Link to Comment caShOnlY
caShOnlY's picture

1. Record number of college educated Americans, which many top economists believe to be a major factor that will benefit America’s economy in years to come

No jobs available for the highly indebted college educated Americans.

2. The continued subjugation of the VIX, which negates claims about a potential ‘market crash’

Massive money creation by FED eliminates risk in market and put massive risk on USD. NOTE*** see PRECIOUS METALS DEMAND!

3. Record low mortgage rates and a strong housing recovery

No jobs and stagnant incomes and lack of buyers except for hedge funds and Wall St. "hedging" against the currency collapse.

4. Record low inflation, which leaves plenty of room for further purchase programs and monetary easing

The record low inflation is DEFLATIONARY, depression, all is hidden by money printing and governement spending(foodstamps, etc.).  Car loans are up to 97 months correalates with low income and part time job creation.

One big blip on the RADAR:  Global banking, financial, economic collapse is on the way. 

 

Wed, 04/24/2013 - 09:45 | Link to Comment kliguy38
kliguy38's picture

Bullion Banks already defaulting on gold delivery......stay tuned ast the "smart money" with "allocated" gold in these bullion banks resort to shitting themselves....Soon they will be getting on their helicopters and flying to Zurich, London, and Paris to find out just WHO has swindled them......THEN they will send in "Frank"

Wed, 04/24/2013 - 09:52 | Link to Comment LawsofPhysics
LawsofPhysics's picture

"THEN they will send in the tanks" - fixed.

Wed, 04/24/2013 - 14:42 | Link to Comment BattlegroundEur...
BattlegroundEurope2011's picture

 

Meet the banksters who set gold prices.

http://www.goldfixing.com/today'sprices.htm

 

bump.

 

Send them a little message ;)

Wed, 04/24/2013 - 10:06 | Link to Comment GoldForCash
GoldForCash's picture

5 percent today...95 percent Tommorow

Wed, 04/24/2013 - 10:16 | Link to Comment Groundhog Day
Groundhog Day's picture

Aussie's are now on the terrorist watch list.  All of them

Wed, 04/24/2013 - 10:23 | Link to Comment Groundhog Day
Groundhog Day's picture

Additionally, they are bowing to their true chinese masters

Wed, 04/24/2013 - 12:32 | Link to Comment MonsterBox
MonsterBox's picture

5%...meh.  Awake me when they're in for 50%.

and fuck you, Ben

Wed, 04/24/2013 - 09:34 | Link to Comment stinkhammer
stinkhammer's picture

fuck you Ben

Wed, 04/24/2013 - 09:41 | Link to Comment dcohen
Wed, 04/24/2013 - 11:23 | Link to Comment NotApplicable
NotApplicable's picture

You're just plain evil.

Wed, 04/24/2013 - 09:58 | Link to Comment NorthPole
NorthPole's picture

+1

 

You're a karma whore, aren't you?

Wed, 04/24/2013 - 09:35 | Link to Comment LawsofPhysics
LawsofPhysics's picture

They stopped printing Yuan?  fiat is fiat is fiat.  Fuck you Ben and all Central Wankers.

Wed, 04/24/2013 - 09:53 | Link to Comment krispkritter
krispkritter's picture

I hope that rat bastard Ben is the last rat left on the sinking ship, USS Dollar...would be great to see the rest of the rats swimming off to their own respective sinking ships too. The world would be a better place with fewer of these blood sucking parasites...

Wed, 04/24/2013 - 12:55 | Link to Comment RafterManFMJ
RafterManFMJ's picture

Nah it'd be better to watch the mass of drowning rats chew each other to bloody pieces, bleeding, drowning, and sinking.

Wed, 04/24/2013 - 09:36 | Link to Comment DaveyJones
DaveyJones's picture

it's almost as if...they don't trust us

this is the war we can't win

because we planted our own bombs

and they're bigger than a backpack

Wed, 04/24/2013 - 09:39 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Indeed, financial "products" of mass destruction.  The same puppet masters at work either way, fuck em.

Wed, 04/24/2013 - 09:46 | Link to Comment DaveyJones
DaveyJones's picture

Why, when we read history, do these "gentlemen" do this over and over and over

don't answer that

just turn to the chapter where we punish them 

Wed, 04/24/2013 - 09:38 | Link to Comment Debugas
Debugas's picture

it is normal to have some reserves in currencies/bonds of the trade partners you are buying products from

Wed, 04/24/2013 - 09:40 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Exactly.  This is the more important issue.  Fiat is fiat, but trade is the real issue.  When goods and services stop crossing borders, troops will.

Wed, 04/24/2013 - 09:41 | Link to Comment DaveyJones
DaveyJones's picture

the perjurative USD

Wed, 04/24/2013 - 09:39 | Link to Comment Investor-1
Investor-1's picture

There is so much going on on the currency markets the last few years. It's a paradise for forextraders! I copy good forextraders and that works great! Made me a lot of money.

Wed, 04/24/2013 - 09:39 | Link to Comment caimen garou
caimen garou's picture

hey ben how does it feel to be the hated kid on the block, you blockhead!

Wed, 04/24/2013 - 10:09 | Link to Comment DaveyJones
DaveyJones's picture

cell block, we hope

Wed, 04/24/2013 - 09:46 | Link to Comment Sheeple Shepard
Sheeple Shepard's picture

 

 

"Australia’s central bank plans to invest about 5 percent of its foreign currency reserves in China" 

 

 

Gotta be USD right? So the Chinese promise a stable (Gold backed?) currency to convince C.Bs to buy their government bonds. They then recieve USD as payment for bonds and use these USDs to buy Gold? The US is getting screwed big time if this happens for any length of time or in any high volume. 

 

Wed, 04/24/2013 - 10:11 | Link to Comment DaveyJones
DaveyJones's picture

as far a screwing is concerned, you have the er and the ee all mixed up 

Wed, 04/24/2013 - 09:46 | Link to Comment buzzsaw99
buzzsaw99's picture

Ben to Muppets: Get back in the kitchen!

http://www.youtube.com/watch?v=yJXH2QL5PvY

Wed, 04/24/2013 - 09:46 | Link to Comment rosiescenario
rosiescenario's picture

Wondering when some of the oil exporters will be pricing oil in gold....and by that I mean actual gold?

Wed, 04/24/2013 - 09:48 | Link to Comment Sheeple Shepard
Sheeple Shepard's picture

Col. Gaddafi was the first and probably last to try that little experiment. 

Wed, 04/24/2013 - 09:49 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Word is Iran is getting away with it.

Wed, 04/24/2013 - 09:52 | Link to Comment Sheeple Shepard
Sheeple Shepard's picture

If by getting away with it you mean within a gnats crotch of getting Nagasaki'd, your right.

Wed, 04/24/2013 - 15:41 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

China/Russia are fans of Kish.  M.A.D. = Iran will be fine.

Wed, 04/24/2013 - 10:12 | Link to Comment DaveyJones
DaveyJones's picture

the petro dollar vs the petro gold is the only real war going on here

place your bets accordingly

Wed, 04/24/2013 - 10:24 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

The Saudi's love that yellow shiney stuff........

Wed, 04/24/2013 - 11:22 | Link to Comment e-recep
e-recep's picture

the fuckers couldn't stop iran's gold/oil trade with turkey, now could they?

Wed, 04/24/2013 - 19:42 | Link to Comment StychoKiller
StychoKiller's picture

Turkey?  What about ham?  Anyone up for a club sandwich?

Wed, 04/24/2013 - 09:56 | Link to Comment krispkritter
krispkritter's picture

I thought Hussein was the first? I think Ghaddafi thought he was too small a player too be noticed, until someone noticed.  Then he got swatted like our old pal Saddam.  'It's not nice to fool Mother(fuckin') Bankers'

Wed, 04/24/2013 - 10:21 | Link to Comment DaveyJones
DaveyJones's picture

well said. If by banker's, we mean western bankers, they will lose in the end. It may take time, God knows how much time, but the game board has tilted , the resources, population and, most important, economic engines are elsewhere and with it comes power. THe only thing these criminal bastards yield is power and as every day passes, it is more and more abstract. 

Wed, 04/24/2013 - 10:21 | Link to Comment Debugas
Debugas's picture

nah Hussein was actually trying to sell for Euros not gold...

Wed, 04/24/2013 - 10:51 | Link to Comment DaveyJones
DaveyJones's picture

he could have been selling them for seashells but the result would be the same.

Wed, 04/24/2013 - 10:22 | Link to Comment Urban Redneck
Urban Redneck's picture

I think King Abdulaziz had him beat by the better part of a century.  The US Mint even made special good coins for the payments, before the Saudis tried bi-metalism and then pure fiat.  We should be due for a Rinse, Repeat rotation on the wonderful cycle of history in about a decade or so...  

http://www.coinlink.com/News/gold-silver-bullion/unusual-items-us-mint-gold-disks-made-for-oil-payments-to-saudi-arabia/

Wed, 04/24/2013 - 12:57 | Link to Comment RafterManFMJ
RafterManFMJ's picture

Lessons were learned. The next country that gives it a go will be protected by the Chinese / Russian Atomic Umbrella.

Wed, 04/24/2013 - 10:16 | Link to Comment Go Tribe
Go Tribe's picture

Putin sooner or later.

Wed, 04/24/2013 - 14:42 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

It's already been tried, only with currency.  Think Saddam Hussein (Euros for oil), Kaddafi (pan-African money, backed by gold).  Look where they, their oil and their gold ended up.  Iran would have been attacked already, were it not for the 'protection' it gets from Russia (and China).

At this point the Fed would have to change its wicked ways or start WW3 and a nuclear winter.  The Fed's true masters prefer Mediterranean climates over N-winters.  So you can bet your last FRN that the Fed will conjure up some 3rd option that keeps them in power.

Wed, 04/24/2013 - 09:45 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

The ultimate death of the Dollar will be blamed on 'radical islamic jihadism' and the American people will buy it hook, line and sinker.

The script is being written right before our eyes.....

Wed, 04/24/2013 - 10:30 | Link to Comment GoldForCash
GoldForCash's picture

Take down will be with an Internet banking virus that we gave them when we interrupted their nuclear program with our virus.

Wed, 04/24/2013 - 11:21 | Link to Comment Toolshed
Toolshed's picture

For real. Notice all the problems at nuke plants recently? Coincidence? Maybe........maybe not. Our Dear Leaders seem to think that the Iranians are stupid. Maybe they are, but not nearly as stupid as our Dear Leaders. And even if the expertise to effectively modify the stuxnet virus does not exist in Iran (unlikely), I assure it exists in spades in China and Russia. Gosh.....what could go wrong?

Wed, 04/24/2013 - 09:47 | Link to Comment ejmoosa
ejmoosa's picture

Every tme I buy more PMs I am continuing my exodus of the US Dollar.

 

When a dam breaks, it starts as a trickle....

Wed, 04/24/2013 - 09:48 | Link to Comment Chupacabra-322
Chupacabra-322's picture

The Federal Reserve Charter expires on December 31, 2013 at 11:59 P.M.

 

The Illusion and deception can continue if the Charter gets re certified.  It must be voted on by Congress.  Will they re cerifiy the Charter?

Well, they passed it the first time during a Christmas Holiday.

Will this be a TBTF Bank Holiday or Fasle Flag Re Certification Federal Reserve Charter to continue the Illusion?

 

“The illusion of freedom will continue as long as it's profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.”
-Frank Zappa

Wed, 04/24/2013 - 09:51 | Link to Comment reader2010
reader2010's picture

If they don't, they get shelter in place.

Wed, 04/24/2013 - 11:22 | Link to Comment Zwelgje
Zwelgje's picture

The charter became open ended in 1927.

Wed, 04/24/2013 - 14:33 | Link to Comment Chupacabra-322
Chupacabra-322's picture

Been doing some reserach.  Here's the link:https://en.wikipedia.org/wiki/McFadden_Act

The McFadden Act is a United States federal law, named after Louis Thomas McFadden member of the United States House of Representatives and Chairman of the United States House Committee on Banking and Currency, enacted in 1927 from recommendations made by the comptroller of the currency Henry May Dawes.

The Act sought to give national banks competitive equality with state-chartered banks by letting national banks branch to the extent permitted by state law. The McFadden Act specifically prohibited interstate branching by allowing each national bank to branch only within the state in which it is situated. Although the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 [1] repealed this provision of the McFadden Act, it specified that state law continues to control intrastate branching, or branching within a state's borders, for both state and national banks.

 

In the End.  Gold, Silver, and Natural Resources which you posse in any Couuntry, whether it be in a Federal, State, and Local Community under the guise of "National Security" and "The Chicago School of Economics" ( Global Criminal Cabal (Bankster/Intelllegence) Crime Syndincate. Will be confiscatied by the Tolatitarian Authoritarian Police State. 

Written by "Classified Woman" The Sibel Edmonds Story

And,

"Confessions of an Enoncomic Hitman" wtitten by John Perkins. 

And "The Shock Doctrine"

written by Naomi Cline.

 

 

Wed, 04/24/2013 - 14:48 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

"Will be confiscatied by the Tolatitarian Authoritarian Police State."

Confiscate THIS!  [grabs his Phaser]  My precious Precious is way beyond their reach.  Fuck 'em!

Wed, 04/24/2013 - 09:47 | Link to Comment q99x2
q99x2's picture

F U Bernanke, JP Morgue and Bankfeind too.

How you like me now What are you going to do.

Holder put you above the law. Ain't going to stop no zombie from getting you.

F U Bernanke, JP Morgue and Bankfeind too.

Wed, 04/24/2013 - 09:48 | Link to Comment reader2010
reader2010's picture

The writing is on the wall. Be prepared.

Wed, 04/24/2013 - 09:50 | Link to Comment orangegeek
orangegeek's picture

The AUD is not a member of the USD Index.

 

I bet they would like to be.

 

There's been a few past ZH articles - Chinese debt is 230% of GDP.  Here's one below: 

 

http://www.zerohedge.com/news/2013-04-17/chinese-auditor-warns-out-contr...

 

 

Wed, 04/24/2013 - 09:57 | Link to Comment The Proletariat
The Proletariat's picture

Hmm.....I wonder if the U.S. needs to embark on some "Humanitarian" efforts in Australia to help them recover from their recent monetary decisions....mate

Wed, 04/24/2013 - 10:02 | Link to Comment Sudden Debt
Sudden Debt's picture

HAHAHAHAHA!!!

LOVE IT!!

IT SHOWS THERE'S STILL ENOUGH PEOPLE WITH A BRAIN IN THIS WORLD!!

Wed, 04/24/2013 - 10:02 | Link to Comment AnAnonymous
AnAnonymous's picture

5pc... the exodus.

People are fleeing the USD to gold, they hold 5pc of their assets in gold...

Wed, 04/24/2013 - 10:16 | Link to Comment Seychelles
Seychelles's picture

Uh-oh, time to buy gold, for sure.

Wed, 04/24/2013 - 10:53 | Link to Comment monad
monad's picture

Thats great news. Now the USA can withdraw military support from the region and focus on our own problem governments.

Wed, 04/24/2013 - 10:58 | Link to Comment Dubaibanker
Dubaibanker's picture

19 countries have tied up to trade directly with the Chinese exporters and financial institutions, with a total aggregate amount of USD 320bn or for about CNY 2 trillion on a rotating basis. http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130326000117&c...

The above clearly indicates that China will continue to rise because almost every major export nation has signed up with China to stabilise the global economic and monetary system if the US debt explodes or US keeps on placing unilateral sanctions which hurt other nations who also have a right to self protect or if US implements tough laws like FATCA or it pressurises China to appreciate yuan or pressurises Switzerland to change privacy rules etc. Now, even the Eurozone has decided not to blindly follow USA but do whatever it takes to help their citizens in the Eurozone by trading with China in their own currencies instead of the USD.

This is a transition period that we are living and passing through.

Ultimately, it is also possible to gain from this growth of China whereby one may invest in Yuan. Fact is yuan has risen for 11 years in a row and this year I expect it to grow by 3-4% since last year it grew only by 1%.

Wed, 04/24/2013 - 11:54 | Link to Comment LawsofPhysics
LawsofPhysics's picture

And when all China's customers are flat broke?  Who will they be exporting to then?  You really think that this centrally-planned, state-run, single-party systme isn't devaluing their paper?  Good luck with that. 

Wed, 04/24/2013 - 12:52 | Link to Comment Dubaibanker
Dubaibanker's picture

Point taken. However, what do you think happened, LawsofPhysics, when GBP lost its lustre or Gold standard stood withdrawn, they did decline in value, however, they still stand well today and it appears like a blip in the long term. China is not silly, just like any businessman with a brain, to sell to broke customers. They will produce less or just like today's banks will lay off sufficient bankers, to become profitable or remain profitable. China's per capita's GDP has risen many times since opening up in 1978 and all sorts of foreigners line up to enter but are restricted like in banking or aviation or insurance or even health care sectors. Rwanda's per capita GDP has also increased since the genocide stopped or for that matter of Sri Lanka since the last few years when the Tamil militants concluded the war. Iraq is doing well, at least economically as is Afghanistan (politics aside) and so are most parts of Africa. All this due to rising GDP giving the Govt and its citizens no incentive to fight each other and be gainfully employed thus making the prosperity last longer, which is exactly what happened in America since World 2 or in Korea and Japan until it started falling apart firstly in Japan and lately in US.

My view is that if per capita GDP and GDP per se rises, the country and its govt has every single incentive to make things grow faster which makes economic sense for more investors to pile on and improve governance, create employment, increase tax revenues, improve real estate values etc. Trick is that unlike Dubai or Spain or Florida or Iceland or Cyprus, to control the flows of hot money and/or foreign investors, because if they leave, then all hell breaks lose.

China has been there for thousands of years and will remain so while US is the agglomeration of immigrants for the last 200 odd years and creates multiple fold value due to their advanced education system among other factors.

Question is: If Immigration stops or reverses, will US be the same as it is today, in 100 years from now?

Wed, 04/24/2013 - 14:58 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

They will then trade in Yuan.  You won't, but they will.

Don't be blind to your own position: money is a Medium Of Exhange.  As long as they exchange real goods & services, ANY agreeable medium will do (as history shows).  Provided you control its production rate, i.e. synch it to the real growth of the real GDP.  Otherwise you've started the same problem all over (as history shows).

Got Gold, got BTC, got Yuan?  Sorry, we only take FRN's at the devalued exchange rate of ____.  :-)

Thu, 04/25/2013 - 00:51 | Link to Comment Dubaibanker
Dubaibanker's picture

I completely agree, Kirk.

For the record, I never said to go 100% yuan.

Yuan should be a part of a portfolio where USD has the highest allocation as on date. Shorting yen, Long on MXN, Long on RUB, Long on Gold are also part of that allocation currently but not more than 5-7% each at best. Neutral on most currencies like BRL and SGD and THB etc. By being long in USD we invariably become short on INR and ZAR or EUR and other weak currencies.

We go where the growth is, take the appreciation and convert back into base currency, except into EUR, where it must remain in USD to protect its purchasing power versus the base EUR.

Yuan is a long term slow and steady gainer due to its geo political rise supported very strongly by a USD 500bn (at 7.7% GDP growth rate) annual rise in its GDP now being the second largest at approx USD 6 trillion in size. Yuan just makes sense to have as on date before it stabilises in the coming years and stops gaining in sync with its GDP rise and political and military rise plus the trade and export growth. I am currently not worried about its decline but in future, maybe...just maybe.

Wed, 04/24/2013 - 11:08 | Link to Comment ChookChoker
ChookChoker's picture

Utter bullshit. The greatest effect on Australias economy recently is the Bankster's (JPM/GOLDMAN's) very recent blatant takedown of the paper gold market. Fuck them. The obvious base price at the current time is $1300 per oz. If they smash it below that a significant number of larger mines close down and very soon after supply/demand fundamentals kick in.

Obama's meeting with the Banksters on Thursday the 11th followed immediately by market, commodities and Gold market collapses was not a coincidence.

If you want an investment tip put a bit of cash into grain futures. Western Australian farmers are bleeding heavily after a few bad years with reliable sources reporting a likely reduction in production of at least 30%. This is a basic calculation based on the number of farmers not recieving funding from Banks this year.

As soon as the general populace can't buy a loaf of bread the focus will change. If  I console myself with utterings of "I told you So" my reward for vigilance will be negligible. I am buying agricultural land with every spare dollar. Good luck to the rest of yoy...

 

Wed, 04/24/2013 - 13:46 | Link to Comment earleflorida
earleflorida's picture

'Xi and Zuma vow to prioritise Sino-South African Relations"  3/27/13

*Note: the entire continent now has agreements pending

http://www.scmp.com/news/china/article/1200232/chinas-xi-meets-south-africas-zuma-ahead-brics-summit

Ps. of special interest is the carry-trade in yaun/renminbi between china and africa reaching ~ US$60bn. in 2012, nearly a third of total [US$180bn.] china-african trade.

Ps2.   so now we have the african and australian continents engaging china for a consenting, premarital lovefest orgy-- a cohesive and coagulating nwo nuclear-family... forever tethered to their adopted surrogated siblings,... India, Brazil, and Russia?!

Ps3. china currently is working on a second aircraft carrier that will in all likelihood be seafaring in a couple of years or less, at a fraction of the cost to the cash-strap'd/crunched unSequestored Craft/MIC!?   

 

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