I'm putting two and two together, and while some here will say Ive come up with 'five', I recommend you consider the following words:
"Michael Pettis from Beijing University argues that China's reserves of $2.4 trillion - arguably $3 trillion - are a sign of weakness, not strength. Only twice before in modern history has a country amassed such a stash equal to 5pc-6pc of global GDP: the US in the 1920s, and Japan in the 1980s. Each time preceeded depression.
The reserves cannot be used internally to support China's economy. They are dead weight, beyond any level needed for macro-credibility. Indeed, they are the ultimate indictment of China's dysfunctional strategy, which is to buy $30bn to $40bn of foreign bonds every month to hold down the yuan, refusing to let the economy adjust to trade realities. The result is over-investment in plant, flooding the world with goods at wafer-thin export margins. China's over-capacity in steel is now greater than Europe's output."
And then there is this from Stewart Thompson today:
"In the much shorter time frame, the NOW, the banksters have piled on MASSSIVE shorts in the Canadian and Aussie currencies against the fundsters? long positions. The latest COT numbers don?t include wed, thurs, or Friday action of last week, which saw the USD weak against particularly the Canadian."
I read these two quotes above and conclude China, Australia, Canada, Brazil (and other commodity-based nations) are in for a hell of a ride - down. Consider also the fact that housing bubbles continue to defy belief in major Australian cities, and in Vancouver, Canada.
Im still buying physical on this basis because of the adverse impact the above scenario would have on the AUD. I see the gold price in AUD and cant help but imagine a balloon forcibly held underwater.
