Wednesday, April 21, 2010

Russia and China Are Selling Treasuries and Buying Gold...

Fred Hickey of the High Tech Strategist newsletter fame gave a brutally honest interview with The Wall Street Cheat Sheet about the financial/economic condition of the United States and how China and Russia, two of the largest financiers of our Government, are protecting themselves from the reckless policies of Obama and Bernanke.  Here's is a quote:
No one seems to be talking about this, but in a recent US Treasury foreign holdings report I saw a flat line where the mainland Chinese were not buying our treasuries anymore. Their position was holding; meaning, they were buying just enough to offset the maturing bonds. Now we’re seeing outright declines. This has gone on for several months and now it’s an outright decline...The Russians are also reducing their positions. They reduced $10 billion in December and it’s dropped from a $140 billion almost to $118 billion over the last few months.

Here is a link to the interview and a must-read: Sell Paper - Buy Gold.  Here's another insightful snippet:
I never loose sleep with my big gold position, but I do loose sleep when I have a big dollar position. I always see pullbacks in gold as buying opportunities because what I’ve discussed are the big forces really moving things. There are very few people on this planet that understand the big macro picture behind the movement to gold. We’re now in a 10 year bull market in gold. We ran a twenty year bear market, so it might be a twenty year bull market. We may be only halfway through.
We know that China is voraciously accumulating a lot of gold.  Recently a senior researcher recommended that China buy a lot more gold in order to raise its gold holdings up to at least 10% of its foreign reserves. They have 1000's of tonnes to buy in order to accomplish this. Here is what Russia is doing, chart courstesy of Richard Nachbar:
(click on chart to enlarge)

Large Central Banks, big institutions and wealthy individuals are just now beginning to direct paper money flows into physical gold and silver. Liberty Coins, a very large coin dealer, reported its 2nd biggest day in silver sales and 5th largest day in gold sales in 30 years of business last Friday after gold and silver were taken down in price on the Goldman/SEC news. This is direct evidence that more people are beginning to understand the golden truth.

The ECB has barely sold any gold so far this year - the first time the last 10 years that European Central Banks have not unloaded a steady supply onto the market. Politicians, Wall Street and CNBC can blow all the smoke they want up our collective ass, but they CAN'T hide the growing movement of funds from fraudulent paper money into gold and silver - honest money for 5,000 years.


  1. I think the reason the MSM is always hyping a Gold bubble is because it's the only defense they can offer against the best performing asset for the last decade.

    By telling investors the Gold bull is over it serves to keep them out of the market. Imagine the hype coming on CNBC or Bloomberg if there were any other asset that could return 21% YOY for 6 years in a row as my G/S position has, and without margin calls or leverage mind you.

    Joe M.

  2. Looks about right to me Dave...another great post.


  3. AND if you go back to May, 2006 or 48 months, Gold has had two rallys for a total of 12 months out of 48 months. So 75% of this 4 year period has been down to sideways action.

    So even though Gold has nice gains over this period this is a perfect example of how the Cartel smothers excitement in this sector.

    Joe M.


  5. Thanks for the feedback and the link Hopium.

    Joe, at least when gold does move, we get big ones.

    Was looking at a daily chart w/my partner earlier and we've been "coiling" between 1080 and 1160 for the most part since the 1220 peak in early December. At most another 2 months of this and we make a BIG move higher OR that move could start in a couple weeks.

  6. Introduction of a new 100. Prelude to introduction of a new 1,000? 10,000? 1,000,000?

  7. Just thought I would pass on another mind numbing link Dave.....sorry not trying to clutter your board.

    Got Gold?

  8. Dave the Russians know whats coming down the pike... There are pictures of Putin holding a gold bar in his hands and just last year Medvedev showed off what looked like a coin made of gold. With him saying this is the new world currency.

    It all hinges on when Russia thinks it has enough gold to scorch the LBMA and comex and thus watch both the UK and USA sink into financial death spiral and allowing Russia to be the new big kid in town without throwing a punch.

    As much as I would hate this scenario, it looks like we are headed that way.

  9. @anonymous: no doubt. someone sent me the link w/the pic of the new c-note this morning.

    @hopium: all value-added links are not clutter. keep 'em coming!!

  10. Like this one Dave....yikes!

    Again got Gold.

  11. Oh this is just priceless,
    [New $100 bill unveiled to thwart high-tech counterfeits]

  12. anliu: i think it will be a China/Russia combo. may be a ways off because if China were to raid the Comex now, it would cause the price of gold to really take off and would hamper their ability to accumulate gold at these artificially low prices.

    I don't know if you noticed, but China Investment Corp - one of CHina's big sovereign wealth funds - recently showed up as a large holder of GLD. I know for a fact that they are aware of the potential for GLD to be a fractional bullion fraud because I was involved in gathering COmex data for some conference calls between CIC and some private parties regarding all aspects of accumulating gold. At some point I would expect CIC to convert its shares into any gold GLD may actually have.

  13. i think europe might also benefit in a gold revaluation along with russia and china.

  14. Agree Mike. They most likely have a lot more actual physical gold than the U.S. The ECB has pretty much stopped selling any gold this year.

  15. LOL Hopium - The funniest part is, I was looking at the NY Fed's year end financial statements today. They use their own accounting rules. They don't even use GAAP. ROFLMAO.

  16. anonymous: will be even more priceless when they roll out the $1,000,000 bill and all it buys is a bag full of canned goods.

  17. Now Dave, all the know it alls (I think you know of whom I speak) will tell you that China and Russia are just buying treasuries through the UK. As we all know Russia has a wonderful banking relationship with the UK and always has. No problem at all, it's just an illusion that any bank anywhere in the world would be buying gold and moving away from treasuries. You should stop this crazy talk.
    Sarcasm on HIGH!

  18. Chinese were not buying our treasuries anymore. Their position was holding; meaning, they were buying just enough to offset the maturing bonds. Now we’re seeing outright declines.

    Two ways that this could have happened:

    1. The US printed up the money paid up and the Chinese sold it in the F/X market.

    2. The US partially paid the Chinese maturing bonds and defaulted on the rest under work out conditions.

    I think the later is the most likely case because no insolvent country I have ever come across has deliberately broken it's BIS agreements and created a disorderly market in their paper without them being in embargo or international sanction. Why would you? In the next stage of the workout you need the good will of all your creditors, why would you piss off the rest of them to favour the Chinese? What's in it for the Fed except a few weeks? Nothing.

    That's why I believe the US is already in default.

    Whatever else has happened the over hang inventory of $'s in the hedge fund books is now all naked with no possible buyer other than the commercial banks and I wonder what price they are going to give them for it. Over $ 5 t matures this year and all of it will have to go into default to avoid an uncontrollable currency collapse.

    You think an uncontrollable collapse has started and I thnk a workout has begun.

  19. LOL GYC - I see you're already in vacation mode. Man, I love the Carribean/Bahamas.

  20. @Anonymous: I think a controlled collapse has started (the banking system obviously collapsed in the summer/fall of 2008) that will eventually become uncontrollable. As long as the Fed is willing to print/issue credit currency, AND the world we trade with is willing to accept dollars for trade settlement, the collapse will be controlled. This is beyond the BIS because I there's is already discord among members and because I think the laws of human nature and economics that will prevent a one-world currency will also eventually undermine the BIS/Basel Accords.

    The collapse is just starting and will get REALLLLY ugly.

  21. The purpose of this article to show that to an extent Russia and China are breaking away from fiat paper.

    The New York banks, Chase, National City, Guaranty Trust, J.P. Morgan, Hanover, and
    Manufacturers Trust were the principal banks controlled by the House of Rothschild through their American agents, J.P. Morgan, and Kuhn, Loeb Co. These were also the six New York banks which bought the controlling stock in the
    Federal Reserve Bank of New York in 1914. They have held control of the stock ever since.

    Likewise the Bank of International Settlements is also owned and controlled by the House of Rothschild there is no real conflict between the owners although the members may squabble. The one world currency is gold and it always has been. Gold is Rothschild's main market and they have been accumulating since it was $200 an oz.

    People like Ron Paul are not opposing a one world currency they are just helping usher it in.

    Ambrose Pritchard in the Telegraph is currently saying that Germany, France, the US and Britian will be downgraded together to AA to avoid a disorderly collapse. If this is true then the Basle Accords will have been amended and China and Russia have been allowed to get some of their dollars out into gold. How much? you do not know, but it is not the flood that would be created by a breakdown of the system if the Fed has without agreement printed over it's limit.

  22. anliu - I think tou've got it right. A nation like Russia is going to gain exponentially from fiat currency blowout in the west. We hear all the time about Cando and Aussie, but never about what the Rubble - i.e. the country with massive Gold, oil/natgas and mineral reserves is doing. Why? When they are ready the will push everyone over. As Jim Sinclair, the world's largest private gold trader, has said over at - Putin is not a man to be messed with. Incidently, he just put out a book called A Pocketbook of Gold: A Survival Manual for Monetary Mayhem. Probably worth a read...

  23. Nice article. Totally true...I have some physical gold and silver already...took me a while to find a good safety deposit box / volt but now is sorted. DO NOT PUT your coins in a bank or in paper gold/silver. I bought from a few guys but I found this site where they also give free gifts with purchases;;))

  24. Great blog, and love the cartoons.

    However... you have a picture of 1oz Gold Eagles, saying this is "real money".

    Hmmm... can you really trust the US Mint to produce high quality gold coins?? Yes it's gold, but what quality??

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