Thread: Soros’s Biggest Buy is Gold - $64 Million in Last Quarter

George Soros’s Biggest Buy is Gold - $64 Million in the Last Quarter

Commodities / Gold and Silver 2011
Jan 14, 2011 - 07:49 AM

Gold and silver have fallen in most currencies today but are higher in the “commodity currenciesâ€

The Coming Flood of Yuan and Chinese Gold Demand

Commodities / Gold and Silver 2011
Jan 14, 2011 - 03:21 AM

By: Julian_DW_Phillips

While China is taking a greater portion of our financial attention on a daily basis, it seems to us that the sheer size of China and its continued growth has not been factored into the world economic perspective, even now. One of the consequences of profit driven capitalism in the past was the relocation of manufacturing from high-cost, developed countries to the lower cost country of China. U.S. corporations that did that, have enjoyed better-than-ever profits, but in the process have educated new, Chinese, lower-priced competition that will overwhelm us all in the future. The enrichment of China and its arrival on the world scene will surpass the U.S. as the largest world economy by 2020 at the latest [we would not be surprised if this happened even before 2015]. This will trigger a financial tsunami that will change they way we think and invest.

The Internationalization of the Yuan - Progress report

The Chinese government has allowed the Bank of China Ltd's to allow trading in Yuan for the first time in the U.S. Individuals can convert up to $4,000 a day without limit for now, on the amount of money businesses can convert, so long as they're engaged in international trading, the report said. We at the Gold Forecaster have been following the steady progress of the internationalization of the Yuan since it began. The goal that seems likely to be reached sooner rather than later will be for the Yuan to be a competing global reserve currency. Effective immediately, Bank of China's U.S. individual customers can now open a Yuan denominated savings account with a $500 equivalent minimum balance. The bank also offers certificates of deposit in 6-month and 1-year terms with a minimum of $1,000 equivalent. Now watch the rush. We don't believe that those who do it hoping to experience an appreciation of the Yuan will see that. But such investor objectives will create a huge demand for the Yuan.

Account Opening procedures

For interested subscribers, the account opening procedures are simple-- there is an application form, a W-9 tax form, and a signature card. Applicants are also required to provide a government-issued ID and one other form of identification such as a credit card, employee ID card, insurance card, etc. You do have to show up in person. Businesses can also open Yuan accounts with a $5,000 equivalent minimum and requisite entity paperwork like Articles of Organization, etc. At this time, Yuan cash cannot be withdrawn from the account. The bank does provide currency exchange services between dollars and Yuan at its Chinatown branch in New York; current limits are up to $4,000 per day, and $20,000 per year.

The Yuan replacing the U.S. dollar

China is doing this as part of a long-term plan to make the Yuan become a fully-convertible competing global reserve currency. Many sovereign nations are holding Yuan in reserve instead of just dollars, and Chinese cross border settlement is now frequently being transacted in Yuan instead of dollars because of new clearing and settlement platforms that have been established in Hong Kong. After Yuan exchanges are established in the U.S., Europe will be next. Then as we forecast, China will price its goods in the Yuan and then pay in Yuan.

Please note that each seven Yuan purchased will replace one U.S. dollar on the international foreign exchange. Each contract priced in Yuan will replace the previous use of the U.S. dollar in those transactions. We believe the change will be rapid now. The belief that the Yuan should be stronger than the dollar and will be some day will accelerate the move to the Yuan. The potential switch will look more like a tsunami than a flowing tide. The concept that this will take a decade is far off the mark. China must have prepared itself for this day very carefully and prepared its banking system for this flood to swamp the world's foreign exchanges. Do not be surprised if by next year we will all be familiar with the Yuan in our own lives.

Taking this further, the impact on the U.S. dollar exchange rate has to be bad, for the dollars no longer used in international trade will come home and add to the home money supply. Maybe there will be no need for QE3? As to the growth of the Chinese foreign exchange reserves, the more the Yuan replaces the dollar, the slower the flow of dollars into Chinese reserves. It won't be a huge step for European trade to by-pass the dollar either. We believe that the attrition, the real reduction of the role of the U.S. dollar as the sole global reserve currency has now begun! Brace yourself for a major set of changes in the global economy going forward.

There are many ramifications that we have not covered here, because of lack of space, but will cover in our newsletters for subscribers in future issues.

Chinese gold demand

We have previously discussed the way Chinese gold demand will impact the gold price via imported gold. Even we have underestimated that demand. Right now, the demand for physical gold in China is surging. The premiums for gold bars for spot delivery jumped to their highest levels in two years there. Both nations are experiencing food inflation in particular, as well as the rising levels of general inflation. If this is a consequence of urbanization taking productivity away from the countryside, we expect the government will rectify that quickly without using monetary means. But overall gold demand is not a response to inflationary pressures there, but the rising capacity as well as rising numbers of middle class investors turning to one of the two prime investment mediums, bank deposits or gold. We expect this to rise rapidly in this country of 1.4 billion people who are rapidly being enriched.

Gold Forecaster regularly covers all fundamental and Technical aspects of the gold price in the weekly newsletter. To subscribe, please visit www.GoldForecaster.com

By Julian D. W. Phillips
Gold-Authentic Money

http://www.marketoracle.co.uk/Article25580.html

Signs the "End of America" Is Nearing, Buy and Hold Gold

Interest-Rates / US Bonds
Jan 14, 2011 - 06:14 AM

By: DailyWealth

Dan Ferris writes: I keep getting subscriber e-mails asking me what good it is to buy stocks when the U.S. dollar will soon be destroyed, taking the value of most equities with it.

This question is a better one now than it's ever been in my lifetime.

I remember many years ago, in the 1980s and early 1990s, when I started investing on my own. Back then, I often read arguments by various gold bugs and libertarian-leaning economists about how the U.S. dollar was on a path to total destruction. Even then, I was often reminded that all fiat currencies meet the same fate, and that the dollar would be no different.

Fast-forward a few years to 1997, when I started communicating that same message for a living. Though I remained more concerned with other things, I kept revisiting this message. I kept thinking the Fed's actions would have dire financial consequences for all of us... but for about 10 years, nothing apocalyptic happened. Every time it looked like the end was finally nigh and the day of economic, political, and financial reckoning was upon us, the Fed would ease, the market would rebound, and away we went on another bullish tear.

But at long last, it seems as though we've finally arrived at the point of no return. Anyone who lends the U.S. government a penny at this point is simply suicidal.

And you don't have to guess about this, either. Listen to the market. It's trying hard to tell you something very important...

More than once, I've said late 2008 was the blow-off top of a multi-decade bull market in Treasury bonds. That's still correct, as interest rates continue to make higher highs and higher lows. Treasury bond prices move opposite to interest rates. So they're making lower highs, and soon, I expect, even lower lows.

Thirty-year U.S. Treasury bonds were yielding as little as 3% in late 2008. Today, they're yielding over 4.5% – an enormous move. If interest rates double in the next year or two, it won't surprise me a bit.



Big moves down in U.S. Treasury bond prices aren't supposed to happen. You're not supposed to think of Treasury bonds as risky. They're where you go when you're afraid of risk.

It's not just the federal government in trouble. The iShares S&P National Municipal bond fund has collapsed. Every time it looks like it's rebounding, it bounces to a lower step. Its recent 52-week low is 10% below its 52-week high. That's an enormous move for municipal bonds.

That kind of drop isn't supposed to happen to municipal bonds. All my life, muni bonds were the second safest investment in the world, next to U.S. Treasury debt. Now, they're loaded with risk, and everybody either knows it, or is starting to get wind of it.



Finally, after years of believing the collapse of the U.S. dollar, though inevitable, was apparently far in the future... it's here.

The crisis so many people have thought and written about for so many years has finally arrived on our doorstep. It's no longer appropriate to say we're worried about the world our children or grandchildren will inherit. We need to be worried about ourselves.

Like any good demon, the destruction of the U.S. dollar has arrived with a smile on his face, in the form of an ebullient stock market. The S&P 500 has rallied 75% since early 2009.

Focused, as usual, on the rearview mirror, investors are way too bullish according to every stock market sentiment indicator I've seen. The American Association of Individual Investors Sentiment Survey, the Investors Intelligence survey of newsletters, Ned Davis Research's Crowd Sentiment Poll... they all point in the same direction: The great horde of individual stock market dabblers is in a hypnotic trance, deliriously happy in its belief that stocks can and will rise to the moon. The Fed is selling pure B.S., and the herd is buying it.

At the risk of seeming callous or unconcerned for my fellow man (the poor sod), this is the stuff of which Opportunity (with a capital "O") is made. The first bet is one we've encouraged you to make dozens of times...

Gold, the anti-dollar, has been telling us for 10 straight years that the crisis is coming. Gold was around $252 an ounce in the summer of 1999. It's now around $1,350. Gold is up fivefold against the U.S. dollar. That's not a great statement of confidence in the world's reserve currency. And it's important that we continue to pay attention to it. It's something you should notice – and something the government, the Fed, CNBC, and Wall Street hope you don't notice.



Buy gold. Hold it. Caress it. Love it. Hide it. But don't sell it.

With the (allegedly) safest bonds in the world crashing, stocks clearly overvalued, and gold near new all-time highs, it's not hard to figure out what to do. Own gold and silver bullion. Own natural resource stocks. Hold plenty of cash and sell fairly valued and overvalued stocks.

The market is telling you tough times are here. Stick with my advice and you'll protect yourself and even profit while others lose... and wonder what the heck is going on.

Good investing,

Dan Ferris

P.S. In my Extreme Value newsletter, I've been studying and preparing my readers for the coming crisis. In my latest issue, I feature two positions that will profit on a market correction and an increase in the value of hard assets – both likely consequences of dollar destruction. And I show readers exactly what actions to take as the value of Treasurys and municipal bonds crash. Learn how to get immediate access to my research here.

http://www.dailywealth.com

http://www.marketoracle.co.uk/Article25588.html