Friday, April 24, 2009


The IMF wants to sell Gold & the Chinese are buying Gold.
Gold Rises to 3-Week High in London as China Increases Reserves
Doubling of China gold reserves

'''China has added to its gold reserves and now holds 1,054 metric tons of the yellow metal, according to a Friday report by the Xinhua News Agency, which cited comment by Hu Xiaolian, head of the State Administration of Foreign Exchange. ''''

China is shifting away from GSE debt to US Treasury debt (and that too -- US Treasuries of shorter term maturities). Also, China is stocking up on Hard Assets ( stakes in mining assets and mining companies) around the world.

Meanwhile the FED continues to buy long term US Treasuries, in order to keep the cost of borrowing low ( a tactic that I do not believe is sustainable in the long run).

'You have only to find a way to multiply your creditors by the cube and pay them by the square, out of their own money. The fatal weakness of the scheme is that you cannot stop. When new creditors fail to present themselves faster than the old creditors demand to be paid off, the bubble bursts.'
--Garet Garrett

The Chinese are thinking long term, while most western governments are focussed on short term fire fighting!

China's Sovereign Wealth Fund investments in Blackstone and the investment banks have taught them to look past the 'smoke and mirrors' analysis of bankers and focus on a sustainable long term investment plan.

No comments: