Re: GOLD Where is it heading?
JustaReader said:
Will the chinese diversify into gold for reserves?
YES
I read also Saudi and U.A.E will diversify their reserves into the Euro...
Remember CHina hold 75% of their total reserves in US dollars (thats about $500billion), when the start selling it, US dollar will PLUMMET, and GOLD by definition goes up, ie. requires more us dollars to buy an ounce....
ANd then if Japan, and Russia (together much more than $1trillion) follow suit, oh no... !
Warren Buffet predicted US dollar would fall and he was bullish on the pound, didnt quite work out last year, he lost more than $1billion, but most economists now agree he wasnt wrong, just early...
Interesting 2 see what happens..
UAE, Saudi considering to move reserves out of dollar
A number of Middle Eastern central banks said on Tuesday they would seek to switch reserves from the US greenback to euros.
Regional FX
Wednesday, March 22, 2006
Washington
http://www.middleeastforex.com/index.php?section=147
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
The United Arab Emirates said it was considering moving one-tenth of its dollar reserves to the euro, while the governor of the Saudi Arabian central bank condemned the decision by the United States to force Dubai Ports World to transfer its ownership to a ‘US entity,’ the UK Independent reported.
“Is it protectionism or discrimination? Is it okay for US companies to buy everywhere but it is not okay for other companies to buy the US?” said Hamad Saud Al Sayyari, the governor of the Saudi Arabian monetary authority.
The head of the United Arab Emirates central bank, Sultan Nasser Al Suweidi, said the bank was considering converting 10 per cent of its reserves from dollars to euros.
“They are contravening their own principles,” said Al Suweidi. “Investors are going to take this into consideration (and) will look at investment opportunities through new binoculars.”
The Commercial Bank of Syria has already switched the state’s foreign currency transactions from dollars to euros, Duraid Durgham head of the state-owned bank said. The decision by the bank of Syria follows the announcement by the White House calling on all US financial institutions to end correspondent accounts with Syria due to money-laundering concerns.
Syria’s Finance Minister Mohammad Al Hussein said: “Syria affirms that this decision and its timing are fundamentally political.”-Khaleej Times Online
The whole world knows the USD is on the nose, but China et al. know it's not an easy trap to extricate yourself from.
China should tap FX reserves to buy gold - banker
Reuters
Beijing, China
Monday, March 27, 2006
http://today.reuters.com/investing/F...type=bondsNews
&storyID=uri:2006-03-27T022935Z_01_PEK157569_RTRIDST_0_
ECONOMY-CHINA-RESERVES.XML
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
China should use part of its fast-growing foreign exchange reserves to buy gold as it seeks to adjust the asset mix to hedge against risk, a Bank of China official was quoted on Monday as saying.
Analysts say China has been gradually diversifying away from the dollar -- although fears of a collapse in the U.S. currency will prevent any dramatic shift. Chinese officials have denied reports they plan to sell current dollar assets in the reserves.
"China should appropriately reduce the proportion of dollars in its foreign exchange reserves while increasing the proportion of currencies such as the euro," the Financial News quoted Wang Yuanlong, a director at Bank of China's Australian operations, as saying.
"We can use part of the foreign exchange reserves to buy gold, which would help make the reserves more diversified and help guarantee and increase their value," said Wang, former economist at Bank of China, the country's largest foreign exchange bank.
China's foreign exchange reserves swelled 34 percent in 2005 to a record $818.9 billion, but the central bank has not disclosed the composition.
Last month, state media quoted Wang as saying China should ideally hold between $300 billion and $400 billion in foreign exchange reserves.
China has been a big buyer of U.S. government bonds, helping to finance a heavy U.S. current-account deficit and to keep American interest rates low. Investors watch closely for any sign that Beijing might shift the government's investment mix.
Central bank chief Zhou Xiaochuan said earlier this month that China would adjust the mix of its reserves in light of global market conditions. In doing so, China's criteria would be safety, liquidity and profitability, in that order.
China's currency reserves have soared in recent years as the central bank, in order to hold down the yuan, bought most of the dollars generated by a growing trade surplus, inflow of foreign direct investment and speculative capital.
The fast-growing foreign exchange holdings signal persistent upward pressure on the yuan, despite China's landmark 2.1 percent revaluation of the currency in July, analysts say