Philly Jim

China Diversifying Out of U.S. Dollars: Bullish for Gold

It can only appreciate to say 1050; if the RMB and Rp appreciate much more against USD, then we can expect gold to continue its upward trend, but unless central banks are buying, nobody else will be with gold that high. The feeling on the ground in China is fear for when the money supply tightens and stimulus spending stops, you will have stuck assets and oversupply, with no buyers and inevitable asset deflation, similar to what happened in the states. The dollar has nowhere to go but up in the short-term with near zero interest rates - long-term, I can see the banana republic's currency being worth as much as the Brazilian real.

How Bad Is the Dollar's Fall?

Last time rates were near 1-2% lenders gave out money like it was nothing, if rates go back down near those levels it will be very interesting to follow where that cheap money goes; it definitely isn't going to consumers with poor credit like before. I feel like it's going to be giving a major "boost" for capital spending in the states which will translate to major infrastructure improvements in the states. I feel like the dollar will rally a lot after we start to see the benefits from this spending and the fed slowly brings the rates back up to 5-6%. I don't care how many high rises or western style businesses pop-up abroad, you just don't have the same wealth protections as you do here in the states.