Friday, March 5, 2010

China Trading US Dollars for US Assets

Made in China now has a fast-growing sibling: Bought by China.

Beijing is using its accumulation of billions of American dollars to step up its investments around the globe. In the last year, Chinese acquisitions in the U.S. have ranged from a relatively obscure theater in Branson, Mo., to stakes in such famous brands as Coca-Cola and Johnson & Johnson.

China's huge stockpile of dollars stems in part from Americans' enormous purchases of relatively inexpensive Chinese manufactured goods and the significantly smaller volume of U.S. exports to the Asian country.

By recycling much of its dollar trove over the years back to the United States with the purchase of U.S. government debt, China has in effect helped Washington finance its deficits. (more)

Chalk up Another Win for the Gold Bulls!

Those of us who have been expecting gold to break out above the $1125 level, and who have maintained our long positions despite warnings from the negative nabobs who are still calling for gold to drop below $1000.00, are now watching the gold bears frantically cover their short positions.

Thankfully we were able to convince our subscribers to pay no attention to the bears and to hold onto gold and silver bullion and mining stocks since the fundamentals are clearly in our favor.

Here are some charts that helped us to disregard the urgings of those who predicted lower gold prices. Charts courtesy (more)

Speculative Premium - And Why The Markets Will CRASH

Yes, I said CRASH, and I meant it.


"Events" like this:

SINGAPORE/CAIRO, March 1 (Reuters) - Copper is likely to climb when trading starts on Monday, lifted by uncertainty over supply after the world's top copper producer Chile was pounded by a massive earthquake, analysts said over the weekend.

The front-month contract opened up more than 8%.

This, despite the fact that the earthquake was hundreds of miles away from the mines in Chile and there was zero damage to them. Some were offline for a few hours due to power failures, but none suffered any physical or structural damage, nor did their export points and the transportation network between the two.

So why did price spike more than 8% even though all this was known by the market before it re-opened for trading? (more)

Will the US Devalue the Dollar?

The ability to wage war on credit gave the West an insurmountable advantage over the East. The West's credit, however, has now turned to debt and the West has lost its advantage. But the return to parity will not be easy.

The three hundred year economic expansion fueled by debt-based capital markets is coming to an end and with it, the hegemony of the West over the East. During that period, debt-based paper money propelled first England then the US to world dominion because of the ability to wage war on credit and to print money ad infinitum.

That era is now ending because the critical balance between credit-driven expansion and debt-driven contraction has now shifted significantly in favor of the latter; and in 2010, both East and West now find themselves on the edge of a growing deflationary sinkhole created by the sequential collapse of two large US bubbles, the and US real estate bubbles. (more)

Experts: Economic Fall of Spain Could Doom Euro

The financial turmoil afflicting Europe began in Greece, and now it’s spreading to Spain.

That could spell doom for Europe’s common currency, experts say.

"Spain is the real test case for the euro," Desmond Lachman of the American Enterprise Institute told The Wall Street Journal.

"If Spain is in deep trouble, it will be difficult to hold the euro together . . . and my own view is that Spain is in deep trouble."

Spain is the fourth biggest economy among the 16 nations that use the euro. And it’s suffering big time. (more)

Faber: Forget U.S. Stocks, Buy Gold Every Month Forever

Investment guru Marc Faber recommends buying gold regularly, as central banks monetize their countries’ debt.

“I think everybody should accumulate gold over time,” he told CNBC. “I’m not saying today is the best buying point, but I recommend people buy gold every month forever.”

Gold hit a record high of $1,226 in December and has since slipped about 8 percent.

The Federal Reserve will crank up the printing press to pay for the country’s exploding debt burden, says Faber, editor of "The Gloom, Boom & Doom Report."

“(Gold's) quantity cannot increase at the same rate as you can print money, which will eventually weaken the U.S. dollar,” he said. (more)

"Real" Unemployment Could Surge to 25%, Portfolio Manager Says

With Wednesday's ADP report and Thursday's jobless claims data laying the groundwork for Friday's unemployment report, there's an intense focus on jobs from Wall Street to Washington D.C. and beyond.

But there's really only one jobs figure that matters, says John Lekas, senior portfolio manager for the $320 million Leader Short-Term Bond Fund: The U-6 or "real" unemployment number.

U6 is more important than the headline unemployment rate because it includes both the unemployed and "underemployed" workers faced with reduced hours who "still can't pay their bills," Lekas tells Aaron in the accompanying clip. "I think that's a more representative number." (more)

Depression USA: New York Tent City, Future of America! RT

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