Commodity Trade Mantra

Posts Tagged ‘Currency Depreciation’

Central Banks are Buying Gold and Hedging Against their Own Policies

It is not surprising that central banks were adding to their gold reserves in 2015, but it is interesting that central banks have been on an unprecedented spree of creating money out of thin air. So while many investors were not enthusiastic about gold, central bankers saw a need. It seems that central bankers who are buying gold are hedging against their own policies.

Who Says You Can't Pay Your Debts with Gold?

The Swiss Federal Customs Administration, reflected that $1.3 billion worth of gold bars were received, believed to be payment on two big bond payments due this month. With a loss of revenue from the drop in the price of oil, Venezuela may have to default on future bond payments. I wonder how the anti-gold crowd will spin this story that gold was used as a payment on debt?

Why Devaluing the Yuan Won't Help China's Economy

The slowdown in China’s economy was set in motion when the yearly rate of growth of the money supply fell from 39.3% in Jan 2010 to 1.8% by Apr 2012. The effect of this massive decline in the growth momentum of money puts severe pressure on bubble activities. Any tampering with the currency rate of exchange can only make things much worse as far as allocation of scarce resources is concerned.

Is China Quietly Targeting A 20% Yuan Devaluation?

Some Chinese agencies involved in economic affairs are assuming a much weaker yuan both over the near- and medium-term. Those projections, which suggest a depreciation of over 8% by Dec. 31 & about 20% by end of 2016, were adopted after the currency was devalued this month & compare with analysts’ forecasts for the yuan to reach 6.5 to the dollar by the end of this year.

China: QE, Printing of Cheap Money, Currency Devaluation and Gold

To the extent that it weakens its own currency, China exports deflation to the U.S. and can help the dollar’s strength. Lower inflation and a stronger dollar reduce the incentive or rationale for any imminent Fed rate hike. So yes, you can almost say this is China’s silent protest against the widely anticipated September hike.

Chinese Devaluation Extends To 3rd Day - Yuan Hits 4 Year Low

Having devalued the Yuan fix by 3.5% in the last 2 days, China did it again, shifting Yuan to 4 year lows. While confusion reigns over why PBOC would intervene at the close to strengthen the Yuan last night, the reality is the commitment isn’t to a devaluation for China’s exports, but its actions are directed toward trying to keep the wholesale finance interfaces somewhat orderly.

China Likely Bought 10,000 tons of Gold. And if They Did, Here’s Why

China’s gold holdings would act as an insurance policy paying off in the case of a dollar dilution. China may be protecting itself from itself as much as from the US because if they follow the Japanese and US model to print their way out of a real estate collapse…gold may simply be “priceless” in sovereign currencies.

Yuan: China's Foreign Exchange Policy Nothing But A Silly Game

This is indeed silly games. Until anyone in the mainland can take money freely in and out of the country, the yuan remains officially defined as funny money. There is no such thing as “normal” in the yuan exchange rate. Normal market forces do not determine it.

Why Some Emerging Markets Are Heading for a Economic Bust

A tighter monetary stance undermines the rate of growth of money supply and thus weakens support for various bubble activities. This sets an economic bust in motion. The main reason for the tighter stance was a sharp decline in exchange rate of domestic currencies against the US dollar.

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