Mountainman: FLATLINE…..Flatline……Holy Flatline…….Oh Boy……The FED “KNOWS” Exactly HOW,WHY,and WHEN……(THEY) do What (THEY)
Do…..JUNE will be A STORY w/in A STORY…….Those of You Following will UNDERSTAND it’s HISTORY in Motion…..IMO
Blessings,Mountainman (8)=New Beginnings……..FLATLINING
Thunderhawk: Backdoc Alert
Bill Gross: We’re close to the economic flatline
The Federal Reserve has employment numbers on its radar as opposed to real economic growth, Bill Gross said Wednesday on CNBC’s ” Power Lunch .”
“Goodness, this quarter, for almost the second quarter in a row, we’re close to the flatline in terms of economic growth,” said Gross, who leads the Unconstrained Bond Fund at Janus Capital Group. “But the jobs market seems to be doing better, and that’s the one they emphasize first. As long as jobs keep going at 200,000 a month, I think the Fed is well on its way to a June hike.”
The Federal Reserve opted to leave interest rates unchanged at its April meeting Wednesday, noting that the labor market had improved, despite the appearance of slowing economic activity and moderate household spending. The Fed eventually wants to normalize rates, bringing the Fed funds rate up to 2 percent, Gross said.
Even with the ” Yellen put” moving options markets, financial assets are yielding nearly nothing, Gross said. Still, he said he only expects one rate hike from the Federal Reserve in 2016. Markets for Fed funds futures now price in a 19 percent chance of a June hike.
“Usually I like to differ from the market or disagree with the market, but I think, in this case, one hike is probably where we’re at,” Gross said. “Can they get there [to 2 percent], based upon this market put, based on the market situations in emerging markets? I don’t really think so, but they want to try.”
http://finance.yahoo.com/news/bill-gross-were-close-economic-203316686.html
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Mountainman: Hello DOC……Yes You WARNED this Would Be a DAY of RECKONING in the MARKETS……and HERE We GO……It’s a OPEN Ones EYES MOMENT……In the {TRANSITION} to A NEW GLOBAL REALITY……IMO
Blessings,Mountainman (8)=New Beginnings……NOW
Thunderhawk: Backdoc Alert
Nikkei 225 Futures Plunge as BOJ Keeps Monetary Policy Unchanged
Nikkei 225 Stock Average futures tumbled, reversing an earlier gain, after the Bank of Japan stood pat on monetary policy when most economists were expecting further stimulus.
Contracts on the measure traded in Singapore sank 3.4 percent as of 12:07 p.m. in Tokyo after rising as much as 1.8 percent before the central bank’s announcement. The BOJ kept its bond-buying program at 80 trillion yen ($733 billion) a year and made no changes to its negative-interest rate or its program for purchasing exchange-traded funds.
“It’s a total shock,” said Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors Ltd., which oversees about $120 billion. “From currencies to equities to everything — you can see the reaction in the markets. I can’t believe this. It’s very disappointing.”
A slight majority of economists surveyed by Bloomberg last week, 23 out of 41, said they expected the BOJ to add to stimulus. Nineteen predicted the central bank would increase purchases of ETFs, eight expected a boost in bond buying and eight projected the BOJ would further cut its negative rate, the survey conducted April 15-21 showed.
http://www.bloomberg.com/news/articles/2016-04-28/nikkei-225-futures-plunge-as-boj-keeps-monetary-policy-unchanged
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Mountainman: WATCH those {SAFETY NETS}…….for They Aren’t So “SAFE” in these FALLING MARKETS/Economies…..this is A MAJOR PART of the {TRANSITION} into the New Reality……BOJ…..is OUT of AMMO…..That Means…..Oh ….. Yah……Not GOOD…..but A Necessary REALITY to Get to WHERE we Want and NEED to be……and The BIG 500 are Feeling It BIG TIME……..
Blessings,Mountainman (8)=New Beginnings……for MANY STARS
Thunderhawk: Backdoc Alert
It gets uglier for stocks if this safety net breaks
Critical information before the U.S. market opens
Mark Zuckerberg was doing his best to cheer up investors, but then Haruhiko Kuroda delivered his convincing impersonation of a wet blanket.
Facebook’s stock FB, +9.57% is still on track for a record close after an impressive earnings report, as our chart of the day shows.
But most stocks around the world are sliding, led by Japan’s benchmark NIK, -3.61% diving 3.6%. Folks apparently just can’t wait until May to sell.
Bank of Japan boss Kuroda shocked markets by not launching more stimulus.
“It is hard not to feel sorry for the Bank of Japan,” said IG’s Chris Beauchamp in a note. “It has tried unconventional policy once this year, and it didn’t work. Now it has tried to be unconventionally conventional, sitting on its hands, and this hasn’t worked either.”
“In both cases, the market has decided to push the yen higher, causing the usual howls of anguish at Japanese exporters,” Beauchamp added.
The Japanese yen USDJPY, -2.50% — a key safety play — has jumped about 3%, trading around ¥108 to the dollar. U.S. stock futures ESM6, -0.33% moved sharply lower as the BOJ news hit, as shown in the chart below:
The key level to watch for the yen is its mid-April mark of 107.63 to the dollar, says today’s call, which comes from Société Générale’s Kit Juckes.
The haven currency already has neared that level in recent trading. Watch to see if the safety play breaks decisively through it.
Slicing through this safety net, so to speak, could mean trouble for riskier assets like stocks.
Key market gauges
Dow futures YMM6, -0.48% have been trading more than 100 points lower, and European stocks SXXP, -0.66% have been showing sizable losses. Gold GCM6, +0.48% has been gaining as a key dollar index DXY, -0.44% drops. Oil CLM6, +0.11% hasn’t been making big moves, letting others take the spotlight for once.
The call
“USD/JPY 107.63, the April low, is the key psychological level to watch,” writes SocGen’s Juckes in a note.
He suggests the yen’s rally isn’t unstoppable. Yet at the same time, he’s not sure when investor flight to the safety play actually will stop.
“I really don’t think we’re going back to the pre-Abenomics world of ever-stronger yen, and I think we’ll see the other side of USD/JPY 115 in due course — but I’m not brave enough to shout ‘Sell Yen!’ from the rooftops just yet, either,” the strategist says.
“The BOJ inaction suggests a desire to ignore the market response to January’s move into negative rates, and wait and see the effects of the policy change. That’s not going to diminish the sense that the BOJ is almost out of ammunition,” he adds.
Other yen watchers see the currency strengthening much more, with Charles Stanley technical analyst Bill McNamara saying, “we could see a move back to around ¥105 in the near term.”
Facebook’s stock is on track to top its March record close around $116, based on its action in extended trading after the social network’s earnings report late Wednesday.
Analysts are fired up, especially after other tech giants whiffed with their latest results.
“Facebook’s results were extraordinary, even by the standards of a company that seems to beat sky-high expectations time after time,” said ETX Capital’s Mark Priest in emailed comments.
Zuck & Co. have put to rest concerns about Facebook’s transition to mobile ads, and the divergence from ailing rival Twitter TWTR, -0.34% is “getting more marked,” Priest adds. Investors are likely reassured the CEO “shows no signs of wanting to let go of the reins,” as he is “even taking the trouble of creating a new class of shares.”
The economy
We just got our first look at U.S. growth in the January-to-March quarter, which showed the economy sputtered and expanded by a weaker-than-expected 0.5%. The other economic report hitting before the open covered weekly jobless claims, which rose to 257,000 versus forecasts for 260,000.
And get set for more chatter about yesterday’s Federal Reserve statement, which was viewed as slightly hawkish, yet still got credit for helping stocks end higher.
The buzz
Hey, St. Jude STJ, +26.59% — Abbott Labs ABT, -6.47% plans to buy you in a $25 billion deal.
Priceline PCLN, -0.43% said CEO Darren Huston is stepping down following an investigation into his relationship with an employee.
Dunkin’ Brands DNKN, -1.07% , Time Warner Cable TWC, +0.81% , Valeant VRX, +3.35% , Dow Chemical DOW, -1.32% , Ford F, +1.43% , UPS UPS, -1.43% and MasterCard MA, +1.40% have been among the many companies on the earnings docket before the open.
Reports from Amazon AMZN, +2.63% , Pandora P, +0.53% , LinkedIn LNKD, +1.32% and plenty of others are expected to grab the spotlight after the close.
Elon Musk has made risky financial moves with his companies. Relatedly, he’s promising a mission to Mars within two years.
First Solar FSLR, -7.50% has been down premarket after the solar company named a new CEO as it released earnings.
120 — That’s the number of suspects charged yesterday by police in a “Bronx gang takedown.” It’s believed to be the largest gang takedown in New York City history.
“When a wave washes over sand, ripples will appear. This simple observation was a scientific mystery until Hertha Marks Ayrton read ‘The Origin and Growth of Ripple Marks’ to the Royal Society in 1904. … Today, 162 years after her birth, we celebrate her legacy as engineer, mathematician, physicist and inventor, her impact still rippling through the scientific community.”
Why the key to the NFL draft’s first round is what the Chargers do with the third pick.
North Korea appeared to fire a ballistic missile on Thursday, but it crashed.
Beyoncé opened her tour and reviewers say it’s “victorious and glorious.”
Who will succeed Lego’s billionaire owner Kjeld Kirk Kristiansen? His son, Thomas Kirk Kristiansen.
http://www.marketwatch.com/story/story?guid=b633f592-0d11-11e6-a1bd-58ef1aa6d05c
Mountainman: You can’t PUMP fake MONEY into the SYSTEM and JUMP into A NEW GLOBAL REALITY based On TRUE VALUES/RESOURCES and this and other Reasons are WHY the MARKETS are FALLING……and NOW are ADJUSTING to a TRUE {MARKET} VALUE…….this will NOT Happen OVER NIGHT……but as We are Showing…..Will be A “CONTROLLED {FLOW}/ CASCADE/CHAOS……The GIG is UP……and EYES are SEEING the Reality of the 7 YEARS of the QE Program…….IMO
Blessings,Mountainman (8)=New Beginnings………Say WHAT………Yup
Thunderhawk: Backdoc Alert
The U.S. Is in the Midst of a Historic Bull Market
A bull market that has been derided as fake, doomed and history’s most-hated just earned a new title: the second-longest ever.
Dodging and weaving through three 10 percent drops in the last 19 months while avoiding the 20 percent decline that denotes a bear market, the advance that began seven weeks after Barack Obama’s first inauguration in January 2009 has now lasted 2,607 days. That matches a rally from 1949 to 1956 which straddled the presidencies of Harry Truman and Dwight D. Eisenhower.
Only the dot-com bubble of the 1990s lasted longer at 3,452 days.
Yet again, the rally is showing signs of fatigue: for the first time its rolling 12-month return is negative, and companies in the Standard & Poor’s 500 Index are reporting their worst profits in six years. At the same time, economists are steadily downgrading their growth forecasts, the international outlook is much worse and investors are pulling money from equities at an unprecedented rate.
Such threats are nothing new, and speculating that anything could stop the
seven-year-old advance has always been a fool’s game. The Federal Reserve and other central banks have shown time and again that they stand ready to inject more cash into the financial system at the first sign of market turbulence.
“I don’t remember another post-war bull market that was this fearful, chronically and persistently,” said Jim Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management Inc., which oversees $337 billion. Investors are “forever prepared for the end of the world, but reluctantly being dragged back into to equities.”
The New Yorker writer John Brooks’ chronicle of the 1950s bull market is called “The Seven Fat Years,” a title few people would apply to America since the financial crisis. In truth, the signature characteristic of the Obama bull market has been its ability to soar above an economy going nowhere, returning 3.7 percent a quarter on average since March 2009, compared with a 0.9 percent gain in gross domestic product. That gap is the widest ever.
Bulls and bears divide on how that happened. To optimists, the 210 percent rally in stocks is justified by a commensurate expansion in earnings, achieved by managers focused on efficiency and cost cuts by the experience of the financial crisis. Pessimists see a market that rose only in proportion to the trillions of dollars in liquidity injected by the Fed.
To read more:
http://www.bloomberg.com/news/articles/2016-04-28/obama-bull-market-dodges-knock-out-blows-to-stagger-into-history
Mountainman: and as this NEW REALITY is being POSITIONED and TRANSITIONED the Expectations Will SURPRISE Many in the MARKETS…..for this CHANGE in (NOT) the STATUS QUO……..IMO
Blessings,Mountainman (8)=New Beginnings…….for CENTRAL BANKS……..
Thunderhawk: Backdoc Alert
Yellen Becalms Global Market Volatility as Fed Signals Patience
Federal Reserve Chair Janet Yellen becalmed markets around the world by signaling she’s in no rush to raise interest rates, sending volatility down in bonds, stocks and currencies.
The Bank of America Merrill Lynch MOVE Index, which measures price swings in U.S. debt, fell to 64.74 basis points Wednesday, a level not seen since the day after Christmas in 2014. The Chicago Board Options Exchange SPX Volatility Index, a gauge of expected price swings in U.S. shares known as the VIX, approached an eight-month low. J.P. Morgan Global FX Volatility Index dropped to the lowest level in five weeks.
“The rate hikes could take a long time,” said Hideo Shimomura, the chief fund investor in Tokyo at Mitsubishi UFJ Kokusai Asset Management, which oversees about $110 billion. “It’s a sign of relief.”
U.S. central bankers skipped an interest-rate increase for the third straight meeting Wednesday. Their statement suggested they’re positive about the underpinnings of U.S. growth and are less worried — though not fully reassured — about risks posed by global economic weakness and financial-market turbulence. The Bank of Japan finished a meeting Thursday by holding policy unchanged.
To read more: http://www.bloomberg.com/news/articles/2016-04-28/volatility-tumbles-from-bonds-to-stocks-as-fed-signals-patience
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Mountainman: Yes …….WHAT an UNDERSTATEMENT here……as In {ALL} the BELOW aforementioned………and ??? Was this CREATED by ADDING on to {ALL} said GLOBAL DEBT to Give the REASON that was Needed to MOVE into this NEW GLOBAL REALITY….???
Hmmm……..THINK on that ONE A bit……IMO
Blessings,Mountainman (8)=New Beginnings……of HARD TRUTHS to DIGEST…..
Thunderhawk: World economy in serious difficulty
The US was the cause of the crisis but has come out better than anyone else in the advanced world and better than many developing countries. During the crisis there was a widespread perception that this was the end of US hegemony. It was end of the dollar as the major reserve currency.
When we look back now, we see that the US is strengthened a lot more as a result of this crisis. Not only vis-à-vis other developed countries — “ Europe, European Union or Japan — but developing countries including China, in economic terms. The status of the dollar as a reserve currency today is unchallenged because of the crisis in Europe, IPS reported.
The US economy is also fragile. Usually economic expansions are often followed by contractions. This is part of the capitalist system working in boom bust cycles. The US has had 24 quarters of expansion since the beginning of the crisis. And a lot of people think simply on this observation that after such expansion US recovery or growth is supposed to come to an end on historical evidence.
But apart from that? It is very difficult to get out of the policies that US introduced in response to the crisis. It does not know how to get out of the policy of easy money. It is very hesitant in raising interest rates. But on the other hand if there is a slowdown in the US and a contraction and renewed instability they do not have any ammunition to respond to it, because they used all their ammunition to respond to the last crisis and they are still using the same except in bond purchases.
We have not had a serious debt crisis in an emerging economy in the past 10–12 years. However, the risks are very serious now. The world is caught in a debt trap today. Why? Because the resolution of the European and American crisis – which was a debt crisis – required cutting debt. But what we have seen is that the policies implemented to resolve that crisis have given rise to the accumulation of additional debt.
In the US, the ratio of public plus private debt to gross domestic product increased from 200 percent to 280 percent. In Japan it increased to 500 percent; in the Eurozone and China it doubled. And in developing countries today it is close to 200 percent of GDP.
The current situation has an uncanny similarity to the 1970s and 1980s. Developing countries had a boom in commodity markets in the 70s which was accompanied by massive international lending by banks recycling petrodollars — oil surpluses. And this twin-boom in commodities and capital flows to developing countries in the 70s ended up with a bust when the US raised interest rates in 1979 and 1980.
And what we had was a debt crisis in Latin America. And the situation now is somewhat similar. We had a twin boom in commodity prices and capital flows and now we have come to the end of this boom even without the US changing its monetary policy in a big way. And the question is will the outcome be the same as in the 1970s?
We are highly vulnerable to the reversal of commodity prices and capital flows. The vulnerability to commodity prices nevertheless varies among developing countries because different types of commodities fell at different rates. Some developing countries benefit from commodity price declines but no developing country would benefit from tightening of the external financial situation.
Now we cannot count on reserves. Traditionally we look at the reserve adequacy in terms of their volume relative to short-term external debt, but now there is a strong presence of foreigners in domestic bond, equity and deposit markets and their exit can cause significant turmoil.
Monetary policy now faces a major dilemma. In order to stimulate demand and growth we have to cut interest rates. A cut in interest rates can trigger capital outflows. So there is a dilemma between growth and stability. If we face a liquidity crisis we no longer have enough reserves to meet our imports and stay current on our debt payments and keep the capital account open — what do we do? Business as usual? Borrow from the IMF? Keep the capital account open? Continue allowing capital to run out, using reserves and the borrowing from the IMF and practicing austerity?
http://iran-daily.com/News/140335.html
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Mountainman: The DOLLAR Played it’s INTENDED ROLE here and it was a CAUSE and DESIRED EFFECT…..IMO……Netting and OBJECTIVE Result
……and NOW We are going to SEE it DEVALUE in {STAGES}…..so as to NOT Create a MASS PANIC {ALL} at Once…..and this is Also {WHY} The Need to (POSITION) ALL Other GLOBAL MARKETS for this CHANGE and it is WHY ALL Other Countries had to Move W/The IMF’S Monetary Policy {Implementation} Process……..IMO
Blessings,Mountainman (8)=New Beginnings…..for the DOLLAR and MANY CURRENCIES………
Thunderhawk: Int’l Currency Trading Slumped 20% in Last 18 Months on Dollar’s Strength
As the US dollar rallied during the past year and a half, global trade in currencies plunged,
reflecting the patterns of trade in goods and services, demonstrating the spillovers of non-coordinated central banks’ efforts to international transactions.
Global trading in currencies has declined steadily throughout the past 18 months amidst the dollar’s rally, with entailing imbalances and volatility in FX rates effectively undermining investors’ appetite for the increasingly risky and unpredictable transactions. Daily volumes of international currency trading dropped to well below $5 trln a day last month. The financial turmoil of late 2015 — early 2016 played its role as well, as rife volatility disrupted normal trading practices.
Exiting or entering currency positions now immediately affects FX rates, a new phenomenon in trading, stemming from central banks’ ultra-accommodative policies resulting in voluntary currency devaluations and rendering currency traders and investors nervous.
To read more: http://www.ooyuz.com/geturl?aid=11409536
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Mountainman: …….Say WHAT…..???…….BANKS are in “TIGHT SPOT” Here……But the BOJ’S STRATEGY is in Line w/ the CHANGES that Are being COORDINATED……A DEAD END STREET…….Or A Means to…….THE END…..Of 100% FIAT…..IMO
Blessings,Mountainman (8)=New Beginnings……Of GREAT EXPECTATIONS……..
Thunderhawk: Bank of Japan Holds Negative Rates Steady Shocking Markets
Weak economic growth and the harmful yen’s appreciation in Japan became even more alarming concerns after the Bank of Japan (BOJ) left interest rates unchanged instead of the expected expansion of monetary stimulus, resulting in a shock reaction by financial markets at home and overseas
Bank of Japan (BOJ) left its negative interest rates regime unchanged after a policy meeting on Wednesday, deciding that potential spillovers of an expanded stimulus would pose more risks to the broader economy than any positive effects on growth and borrowing.
The move surprised markets and commercial banks, as well as Japan’s manufacturers: the export-reliant zaibatsu have recently been hurt by the yen’s appreciation, and BOJ going deeper into negative rates territory might have eased pressures on the nation’s corporate sector.
Yet, BOJ Governor Haruhiko Kuroda and his colleagues decided they would take longer evaluating the spillover effects of negative rates as the nation’s borrowing has faltered under negative rates, while the financial sector might have started to overheat after the regulator first implemented the aggressive stimulus in January.
“The decision came as an utter surprise. I thought the BOJ would ease further today to accelerate the yen trend which had been weakening on expectations for further easing,” Hideo Kumano of Dai-ichi Life Research Institute said.
To read More: http://peoplenetv.com/bank-of-japan-holds-negative-rates-steady-shocking-markets/
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Mountainman: Do You Understand WHY……Countries are Doing WHAT they Are DOING NOW….???……You can’t Go from the “NORM” to a {MAJOR} Change in Ones Economy and EXPECT the WORLD to just HANDLE IT…….therefore the CASCADE of ECONOMICAL FALLS Is done in STEPS……And then it can be Better SOLD to the PEOPLE…..and this is HOW and WHY the BRITS/will BREXIT the EU…..Which Set the STEPS for the Remaining EU Parties……..IMO
Blessings,Mountainman (8)=New Beginnings……for the BRITS…..
Thunderhawk: UK Economy Not ‘Ticking Along Nicely’ Due to Brexit Effect
UK’s economy lost momentum in the first quarter and saw its weakest growth for almost a year due to a decline in industrial production, but could the slow-down be attributed to Britain’s possible departure from the EU?
Gross domestic product grew by 0.4 per cent between January and March, down from 0.6 per cent in the fourth quarter. The cause of this was the drop in manufacturing and construction output.
The results were published by the Office of National Statistics (ONS) and show that this was the weakest result the UK has witnessed since the end of 2012.
Part of the slowdown was due to a sharp fall in construction output, which dropped 0.9% in the first quarter, industrial output, which includes manufacturing, declined by 0.4%.
“Services continue to underpin the economy but other sectors have shown falling output this quarter,” said ONS chief economist Joe Grice.
According to Rob Carnell, ING’s chief international economist:
“There is clearly a Brexit effect right now and you can see this in the economy, dipping down. If we had not had a referendum right now, things would be ticking along nicely, we would [also] see an interest rate hike.”
With less than two months before Britons vote on whether to leave or stay within the European Union, these latest numbers could provide ammunition for both Brexit and those who want to stay in EU quarters.
The UK Chancellor of the Exchequer tweeted that although GDP was up today 0.4 percent, the threat of Brexit was weighing heavy on the country’s economy. Industrial production and retail sales figures have been low recently and some experts believe this is a trend that could continue until the referendum is out of the way.
The uncertainty of whether or not the UK will leave is certainly taking its toll on the economy according to those wanting to stay in the EU.
However, Brexit campaigners believe the slowdown reflects a period of global turmoil fueled by concerns over China.
These figures come at a time when the Organisation for Economic Co-operation and Development (OECD) stated that Brexit could mean that the UK is hit by tighter financial conditions, trade barriers and restrictions on labor mobility, leaving the economy 5 per cent smaller by 2030, compared to if it remains within the EU.
http://www.ooyuz.com/geturl?aid=11394586
Mountainman: CHINA has to Position themselves for Their COMING ENTRANCE to the SDR BASKET on Oct 1,2016……This {TRANSITION} serves A Few IMPORTANT Reasons for their CHANGE…..
First Basel 3 Regs Requires {ALL} Countries to Back their Currency w/ a [Portion] of GOLD……This Move NOW for China will HELP Establish Value and Confidence…..for INVESTORS and The GLOBAL MARKETS……
Next it Prepares “THE WAY” for The Other Countries…..From The EAST to the WEST……IRAQ is Already 25% Gold Backed…..Thus the Reason DOC has taught from his Perspective as to (WHY) ONE Should Hang Tight and Let VALUES Globally Come Into their Place at their Appointed TIMES…….(OIL) and Other resources will Play their INTENDED ROLES as Well in this NEW REALITY as Well……IMO
Blessings,Mountainman (8)=New Beginnings…….for CHINA and MANY other SHINY NUGGETS……..
Thunderhawk: While America Debates The $20 Bill, China Moves Closer To Gold
On Wednesday, Jack Lew announced that the US Treasury was following Ben Bernanke’s advice and keeping Alexander Hamilton on the $10, instead deciding to bring Harriett Tubman to the $20. While Lew’s news left America distracted in debate over whose portrait should grace the Federal Reserve’s most popular bank note, Zerohedge was highlighting how China was taking important steps to distance themselves from the dollar.
Earlier this week, Reuters reported China taking the bold step of launching a yuan-denominated gold price. Reuters noted:
As the world’s top producer, importer and consumer of gold, China has baulked at having to depend on a dollar price in international transactions, and believes its market weight should entitle it to set the price of gold.
The new benchmark may not be an immediate threat to London, but industry players say over time China could set the price of the metal, especially if the yuan become fully convertible.
During an interview with Bloomberg TV Hao Hong, managing director and chief China strategist with Bocom International, one of China’s largest banks, put it more bluntly:
By trading physical gold in renminbi, China is slowly chipping away at the dominance of US dollars….The gold reserve on the China balance sheet has almost doubled since 2009. By holding gold, and moving away from a US-dollar centric system, we actually require less US dollars.
Of course the true measure of China’s gold holdings is still a closely guarded secret by the Chinese government. While the country has taken steps to increase transparency in its reserved reporting, which bolstered their successful campaign to have the yuan factored into the IMF’s Special Drawing Rights, James Rickards explains:
[T]hese figures are misleading because China keeps several thousand tonnes of gold “off the books” in a separate entity called the State Administration for Foreign Exchange (SAFE). Small amounts are transferred from SAFE to PBOC monthly, and that becomes the basis for the official reserve reports.
Along with bolstering their gold holdings, China has reformed its banking system to be friendlier to gold trading. In 2012, China announced interbank gold lending, to ease the exchange of gold between Chinese banks. China’s growing interest in gold’s value as money shouldn’t come as a surprise considering the Wall Street Journal, a few months later, reported that the works of Hayek and Rothbard were being read by Communist Party officials in the country.
So while, in spite of Ben Bernanke’s assurances to the contrary, it is clear that China still sees gold as money. And, as Rickard’s argues in his new book The New Case for Gold:
Despite disparagement by policy makers and economists, it will remain as a store of wealth par excellence, and continue to play an integral part in the world’s monetary system.
http://www.theeventchronicle.com/finanace/america-debates-20-bill-china-moves-closer-gold/#
