Thursday, September 30, 2010

China Warns About The Dollar

(I know a lot of you saw this article already, but I am compelled to add my  2 cents, especially since the reader who has incessantly busted my stones over my bearish dollar call has disappeared)

When China speaks, the U.S. should listen: 
Any appreciation of the dollar is “really temporary” and a devaluation of the currency is inevitable as U.S. debt rises, Yu said in a speech in Singapore today...Such a huge amount of debt is terrible,” Yu said. “The situation will be worsening day by day. I think we are one step nearer to a U.S.-dollar crisis.
Here's the link if you have not seen the article by now:  LINK

This guy also goes on to say that "China should reduce its holdings of U.S.-dollar assets to diversify risks of 'sharp depreciation...'” Essentially this is a statement telling the world that continued support of the U.S. dollar by China will be limited at best.  Translation:  the dollar is going a lot lower.

Make no mistake about it, even though the comment above came from "a former advisor to China's central bank," when the Chinese Government wants to make a policy statement, it's usually done through "representatives" like this.

As per the graph below, you can see that the dollar has broken a head-and-shoulders chart formation, which usually implies much lower price levels are to be expected:

(click on chart to enlarge)

To be sure, the dollar is technically a bit "oversold" and can bounce at any time.  But the weekly chart is not reflecting an oversold condition, which means any corrective "bounce" will be brief.  Of course, this also means that gold and silver will going much higher.  Got any?


  1. I`m BACK CHICO!

    Right on Que as the USD makes it next leg up.

    Your pebbles have grown since we last went into the ring.

    FYI I`m 75% in PM`S. My lust for a higher buck is so
    I go ALL IN up to 90% PM`S! The remaining 10% will be for monthlies.

    Anyway, let`s keep this healthy debate going Chico.

    But, spare me any Ayn Rand references.
    She was an Intellectual skank.

  2. LOL. Touche! Glad to see you have PM religion!

  3. Intellectual skank? Tell me Dagney wouldn't be the bang of a lifetime. F-you.

  4. Cut China off , and watch a new rust belt arise in Asia. Think Detroit fell watch China.

  5. ROFLMAO...I'm dating the real-life, blonde version of Dagny.

  6. Lucky you! So which one of Ayn's... er, I mean Dagny's... lovers are you? Francisco? Hank? John Galt?

    Keep up the excellent writing!


  7. thanks for the feedback. i'm just plain old Dave in Denver who is dating the woman of his dreams...

  8. Is selling shares you don't have illegal? Is someone monitoring this phenomenon?

    Who has the printing press that manufactures all these shares?

    I can't figure out how so many million of mining shares can be sold each and every day and the price doesn't seem to rise. Who is selling all these shares while the price of the product these companies sell keeps on rising.

    Perplexing it is.

  9. Rothbard, that's naked short selling. It's highly illegal and it's not enforced AT ALL by the SEC/NASD. Our Govt is so fucking corrupt it boggles the mind.

    And the naked short selling is really rampant in the OTC mining shares.

  10. Dave,
    you found a woman that can smoke ribs and sear steaks over lump charcoal! More power to you my man!

  11. LOL. Hey gyc! Actually I'm close to pulling the trigger on one of those green egg grills so we'll test her bbq'ing prowess on that. But she's an excellent cook and makes incredible desserts.

  12. I think the components of the HUI are being targeted by these naked shorts, Dave. What do you think? That's why SLW and ANV got away, but now they could be targets. HL is one silver that hasn't done's in the HUI. How do we beat this?

  13. HUI stocks are definitely manipulated like that. DTC does nothing to prevent naked shorting. It's beyond criminal.

    Eventually the market will overwhelm the naked shorts and that short interest will make these stocks really go parabolic. That will in stage 3 of this bull mkt. We're still transitioning from Stage 1 to Stage 2...

  14. That was posted tongue in cheek, but thanks for the reply.

    So many printing presses are running non-stop these days. Thing is, it is even easier to pull off today b/c no physical certs or dollar bills
    are needed to print. All is created with the stroke of a keyboard.

    As this 10 year managed 'retreat' continues, I wonder to myself at what point, if any, will the price of gold and/or shares be allowed to trade
    freely, based on investor demand?

    Will it take a breakdown like 'The Road' for a true price to be found...and by then who the hell would care.