Thursday, August 25, 2016

Rickards Says You Should Hedge
(Like China Is Doing)
"China knows the U.S. historically has devalued the currency through inflation to get out from under the debt. So China is highly vulnerable to inflation because it owns so many US dollar-denominated securities. Why doesn’t China simply dump them? The answer is that it can’t. The U.S. Treasury market is not that deep. It’s not very liquid. China can’t dump that quantity of Treasury securities even in the market we have. And the President could actually stop them if they tried to do it. So the Chinese are stuck holding that paper. They want a strong dollar but fear that we’re going to inflate the dollar. And they’re probably right about that. Since they can’t dump the Treasuries, they’re buying gold as a hedge. If the dollar is steady, the securities retain their value. The gold may not increase much. But if we inflate the dollar and it loses value, they’ll lose on the paper side. But they’ll make it up on the gold they own. The price of gold is going to soar. So they’re creating a hedge position. Again, they prefer a strong dollar. But with their gold purchases, they’re ready for a weak dollar. My advice to you as an investor is this: If it’s good enough for China, it’s also good enough for you."
- Jim Rickards*
LINK HERE to the article

1 comment:

Anonymous said...

Donald Trump can beat polls, UKIP's Nigel Farage tells rally

Outgoing UKIP leader Nigel Farage has urged Republicans to "get your walking boots on" and drum up support for Republican presidential nominee Donald Trump.

He appeared before 15,000 activists in Jackson, Mississippi, being introduced by and sharing the stage with Mr Trump.

And he said the party could "beat the pollsters" in the presidential race.

Mr Trump, who is trailing his rival Hillary Clinton in the opinion polls, backed the UK's exit from the EU.

In a tweet last week, Mr Trump said: "They will soon be calling me Mr Brexit."

Mr Trump introduced Mr Farage as the man who "brilliantly" led the UK Independence Party's campaign to secure a vote on the future of the UK's 40-year membership of the European Union.

Mr Farage began his address by saying he had a "message of hope and optimism" for the Republican Party.

He drew on parallels between Mr Trump's bid for the White House and that of the Brexit campaign's "people's army of ordinary citizens", which he said engaged successfully with the public prior to the UK's referendum vote on whether to leave the EU.

He told those gathered: "If you want change in this country, you better get your walking boots on, you better get out there campaigning.

"And remember, anything is possible if enough decent people are prepared to stand up against the establishment."