Posts
![[Most Recent Quotes from www.kitco.com]](http://kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
From dollar fright to dollar flight
Tuesday, October 16, 2007
Thank goodness the British bought $33 billion in U.S. government debt back in August or the International Capital flows reported earlier today by the Treasury Department would have been even worse. Total holdings of equities, notes and bonds fell a net $69.3 billion after an increase of $19.2 billion in July, the Treasury Department said today in Washington. Including short- term securities such as Treasury bills, foreigners sold a net $163 billion, compared with a gain in the previous month. Demand for U.S. stocks overseas declined as the deepening housing recession and credit-market rout threatened investment, hiring and consumer spending. The drop in purchases was the first since August 1998, when Russia defaulted on its debt.
If you can locate the correct spreadsheet at the Treasury Department's website (not an easy task), you'll see that there was lots of selling in Asia two months ago when all the credit market turmoil was getting started.
Bloomberg reports on the record amount of U.S. financial assets sold in August:
Add this to the growing list of agenda items for the G7 meeting, set to begin on Friday.
4 comments:
And so it begins.
Tim, my understanding is that as long as the Japanese and Chinese (and whoever else) keep buying lots of NEW debt (like at treasury auctions)we can still finance our various deficits and keep long-term interest rates relatively low (isn't the 10yr t-bill somehow tied to the 30yr fixed?). The problem with net selling of dollar-denominated assets is that it puts downward pressure on the dollar. But now that I think about it, enough of that would probably make it less likely China and Japan would keep buying new assets they know are in the process of radically depreciating.
What's your take? Am I getting this right?
Also, gold will obviously rise in dollar terms as the dollar tanks. But if there is enough instability out there, won't gold also rise vis-a-vis the other currencies? If so, you have a double push in dollar terms (the dollar depreciation aspect plus real-value appreciation). Do you see this double whammy coming our way? Is the Day of the Goldbug almost here?
-Vespucian
Sorry for the tardy reply. I think you are about right on all counts. There is an enormous and still growing short position on COMEX gold right now with increasing talk of a short squeeze.
Middle East oil money typically goes through the U.K. They do this so the common folk don't get upset.
Thanks Tim.
-Vespucian
Post a Comment