"Belief" may be over stating my POV, I do have doubts the US will be the main supplier to the Saudis a decade from now. My "evidence," admittedly weak, for this is fact the new Saudi King has already gone to both Moscow and Beijing for discussions at the highest possible level, (but not to the US), where oil and weapons were the main subjects. He is rumored to be offering to buy the helicopter assault carriers the French made under order from the Russians (but can't deliver due to sanctions) and the fleet of newly designed, specifically for those small carriers, Russian attack helicopters. If he does, that will strengthen my ideas that the Saudis are turning more to non-US weapon suppliers. Yes that is true, RELATIVELY LESS IMPORTANT, but both the US Energy Administration and the international, OECD/IEA expect oil global demand (and consumption) to keep growing by more than 1% /year. Please Register or Log in to view the hidden image! See also the first simple bar chart here: https://www.iea.org/oilmarketreport/omrpublic/ For reasons not clear to me, it will not copy here, even though this one, the third there, did. Perhaps it is because the first chart is "interactive." I used that feature to tell you that 96.78mb/d was the demand projected for 4Q 2016 & 90.8 mb/d was the demand for 1Q2013 - A 5.98mb/d increase in less than three years (11 quarters to be exact); but if we call it three years that is 5.98/3 = 2% /year. I said "more than 1% annual increase in oil demand" as if and when oil prices get back to level shale oil production is economical, the current surge to buying SUVs and pick up trucks will surely slow.
I would just add that the oil your demand forecast is only for next year and I was referring to years and decades.
I'm sure your are not forgetting that China is one of the worlds largest gold producers, or are they the largest producer? Do you keep abreast of what the pundits are saying about their gold reserves? I have been following that line of news, and there are some interesting scenarios as to how their gold reserves may come into play if it ever comes down to members in the IMF's SDR having to submit to gold audits to establish the SDR ratio. That might just be the motivation for the US, and the IMF, to keep the Yuan out. A little update on China's monetary reserves, including US treasuries. I don't think they are at risk of running low for a few years. At least not before the IMF says no again next year to including the yuan in the SDR. http://www.bloomberg.com/news/artic...treasuries-as-dollars-needed-for-yuan-support Somewhere I read that China is going to great lengths this week to stabilize the markets and the Yuan as window dressing for their upcoming military parade, but maybe they won't be so accommodative after the big gala; letting the Yuan drift down would benefit them, as you indicated.
China is the world's largest gold producer, but its gold reserves are rather puny when compared to other developed economies. The US gold reserve is more than 8 times larger than China's. And I don't think any nation of consequence is worried about gold audits. The US recently completed a gold audit and found it had more gold than expected because the gold content was higher than expected. But it really isn't very relevant to a discussion on currency as not a single currency is backed by gold and regardless what goldbugs want to think and believe there is absolutely no chance in hell any nation will revert to the gold standard. Yes China's cash reserves are huge, about 3.7 trillion dollars. This week China began doing what it should have done all along, attempting to stimulate its economy. Now the questions are how much damage has been inflicted on the Chinese economy and will China carry out reforms and will it continue to stimulate its economy? I don't think anyone knows the answer to those questions yet. China certainly has all the tools it needs to effect a turnaround. It has the currency. But does it have the leadership? That is the question. On the good side, the US released revised Q2 GDP today and it was 3.7%. That's a very good number.
So they say. That was the point of asking if you keep abreast of what the pundits are saying about their gold reserves. Maybe China's number is higher, given the stats related to their gold production relative to the physical gold transactions on the SGE (physical gold exchange) over the past ten years or so. Really? I didn't know that. Is there a link to that news? Really, I didn't know that either. I thought most of the countries still considered gold to be money, not backing the currency, but useful at a value determined by the exchange rate. Central banks will accept it as payment of debt, won't they? Countries seem to want to take it back from the US vaults; and can't always get it without lengthly delay. It is often leased out at an interest rate. Those are some characteristics that say it is still money in circles outside of the central banking community and the "its just a pet rock" perspective of the federal reserve. Are they careless to have let things get so bad, or did they go to great extremes to shift their economy form export dependent to internal consumption dependent in the face of US devaluation of the debt China holds? The US borrows at the current value of the dollar, prints money to stimulate its economy, and pays back the debt with currency of less value. China's "currency war room" is just doing what anyone would do, I think. It is a war, and not just on the part of China; the devaluation going on is not just the tiny Yuan move, it is also the trillions of dollars of money printing by the Fed and western central banks too. Your are not at all suspicious that the recent decline in stock prices may have crept into the calculation, knowing that if it came in above everyone's estimates it might serve as a sort of stabilizing factor? You didn't comment on my mention of the SDR, and the fact that China might not be permitted in, even next year, due to a concern that full disclosure of gold reserve balances might play in the motivation to keep them out. The pundits are saying China has a lot more gold than they report, and the statistics bear that out. I will be interested in learning about that recent US gold audit, so please give me a link.
It is widely believed / reported that China is selling US treasuries. EG: http://www.bloomberg.com/news/artic...treasuries-as-dollars-needed-for-yuan-support Who the new owner of them is not very important, especially if they just still continue to be held in some nation's reserves. What is more interesting and significant is what is China doing with the dollars from maturing treasuries. They stopped "rolling" those dollars more than two years ago. China's stated policy and accomplished fact is to reduce the dollar fraction in its reserves. - In fact they are doing more than that. They are reducing their absolute holding, not just the relative fraction. It appears that the main thing China is doing with this inflow of dollar (not just from not-rolled bonds, but also from US's chronic trade deficit with China) is to buy real (as opposed to paper assets), although they have increased their holding in reserves of Australian paper (Bonds, mainly). It is clear that China, generally speaking, is losing faith in the purchasing power of fiat currencies. - Partially evidenced by them not only being world's largest producer of gold, but most months the world's largest buyer. Quite possibly, "every month" as the SGE's public data is far from the only Channel physical gold enters China. One can only speculate how much gold China actually holds. When and if China joins the IMF’s Special Drawing Rights (SDR) basket, it will likely reveal just how much gold it has. (The IMF may require some realistic figure, if not an actual audit.) Despite being the world's largest producer (by about 40% more than "No.2") and almost certainly the largest importer, by a significant margin, (when non-SGE channels are included), officially China has only 1,054 metric tons of gold in its reserves. Beijing has kept that figure unchanged since 2009 in the data it reports to the IMF. It probably has much more. - Estimates cover a wide range, but that six year old data (1,054 tonnes) is obviously way low, especially now that China is actually reducing the absolute (not relative) number of dollar based assets in it reserves.
And do you have proof those numbers are incorrect? Maybe China’s numbers are lower. I can’t think of one reason why China would under state its gold reserves. Historically China makes things look bigger and better in China. So if anything, China would overstate rather than understate its gold reserves. China is a very nationalistic place. http://articles.latimes.com/2013/feb/18/business/la-fi-mo-gold-new-york-fed-audit-pure-20130218 https://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm Now if you have proof the US government is lying about its gold reserves or China is understating its gold reserves, now is the time to show it. No country considers gold to be money. All world currencies are fiat currencies. The gold standard ended worldwide with the demise of Bretton Woods in 1971 when US currency became a free floating currency (i.e. not backed by gold). Bretton Woods was the post WWII agreement on currency exchange rates which pegged currency value to fixed gold value. Two, gold leasing is a myth. The US central bank owns absolutely NO gold, though it does warehouse gold for others (e.g. Germany). The US central bank doesn’t lease gold. I don’t know of a single central bank that does. And there is no good reason why any central bank would want to do so. In fact the whole notion is silly and it doesn’t make sense. But it is a popular myth in goldbug and conspiracy circles. Gold isn’t leased out period for potatoes or interest or anything else. Central banks are not intended to be money making operations, though many do make money for their governments (e.g. US Federal Reserve). I don’t know where you get the notion countries want to take if from US vaults. I don’t understand that statement. Other countries (e.g. China and Russia) want many things from the US. But that doesn’t mean they are going to get them. If they want US gold they either buy it, assuming the US wants to sell it, or take it by force and neither of those countries separately or together have the ability to do that. If they want to access their gold deposits held at US institutions they can do that without delay. Where does this notion foreign countries can’t get gold from US vaults? Are you referring to the German gold conspiracy where conspiracy nuts claimed the US told Germany it couldn’t get its gold deposits back and would have to wait because the Federal Reserve had leased Germany’s gold and didn’t have it? That conspiracy is bunk. As previously stated, the US Federal Reserve doesn’t lease out gold. I don’t know what that means. China has wanted to shift from an export dependent economy to a more consumer driven economy to be more like the US. But, when it does that, its chief economic advantage (i.e. low cost) vanishes. That is what has happened. That has nothing to do with the US. Two, I don’t think you understand how debt works. When the US issues debt, it auctions a promise to pay a certain amount at a specific times (zero coupon bonds) or to pay a series of fixed payments over a fixed period of time. That promise has a monetary value which can be easily calculated. It’s referred to as “present value”. Those promises (i.e. bonds) are auctioned weekly. And bond buyers pay a price to the US Treasury for that promise to pay. Whatever that price is, that is what the US Treasury receives for its promise of future payments. There is no devaluation of anything. The US Treasury doesn’t go down the Bank of China and fill out a loan application. The Bank of China bids on US debt along with other bidders. The highest bid wins the Treasury like as with any other auction. As I said before, China wants the benefits of a reserve currency state, but it doesn’t want the cost. When China bids, as with any bidder, for US debt they know the historical and expected US inflation rate and that is factored into their bid. A higher inflation expectation lowers the price. A lower inflation expectation increases the price. And US debt is highly marketable. It can be easily resold. So if at any time, China wants to sell that promise (i.e. Treasury), it can. As I just explained, inflation is known and well anticipated and baked into the price China pays for US debt when it bids for that debt and for that reason your devaluation thesis falls flat. US inflation rates have been very stable over time. So this isn’t difficult. Interest Rate Components = Default Risk + Cost of Money + Inflationary Expectations + Liquidity Risk + Maturity Risk In the case of US Treasuries, the default risk is valued at zero. What’s missing from your statement is how interest rates are determined. As repeatedly pointed out to you China is trying to have its cake and eat it too. China can continue to build is economy. But that means in needs to be able to compete on something other than just cheap labor. Because as China’s economy grows, labor becomes more expensive; and China’s labor has become more expensive. China then loses its economic competitiveness. That’s China’s dilemma. The trillions of dollars printed by the Federal Reserve have not produced the inflation you theorize. Actually, year to date, US inflation rate is slightly negative. That’s a boom for bond holders like China because it wasn’t expected. It takes more than just printing money (i.e. expanding the monetary supply) to cause inflation. That’s another conspiracy notion. There is no indication the GDP number was in any way manipulated. The US is transparent. The data is freely available and used by business and academia alike, moreover it is consistent with other data. Actually, this news is bad for the stock market. And here is why, within a few weeks the Federal Reserve Open Market Committee will meet and review Fed interest rates. A good GDP number makes it more likely the Federal Reserve will increase interest rates and that is bad for stocks. A higher interest rate would slow US economic growth. That is a bad thing for US stocks. The stock market is forward looking. Last quarter's economic growth isn't as important current and future quarter economic growth. Well I think I did, I think it’s nonsense. If you have proof China is underreporting its gold reserves, where is it? And why would China do such a thing? China has always gone overboard to paint a rosy picture of the state. And as I said before, gold is irrelevant. It isn’t used as a currency anywhere. The gold standard was ditched decades ago and for many good reasons. No country is seriously considering a return to the gold standard. Gold is just another commodity like any other. It isn’t a magical substance, although many people seem to think it is.
It is hard to understand why, despite Congressman Ron Paul's years of efforts, no independent audit of the gold claimed to be at Fort Knox has been permitted for more than 60 years. The treasury has pointed to fact that it would take 400 men working full time more than six months to examine each bar there, but normally samplying is done, not every bar needs to be examined. - Four qualified outside men sampling 1% of the bars in six months would go a long way towards termination the many dozens of reports that constantly question the existence of either US owned gold (or even the existence of any gold) at Fort Knox. Here are two quite recent ones: http://moneymorning.com/2015/05/12/is-there-gold-at-fort-knox/ http://etfdailynews.com/2015/05/12/is-there-any-gold-at-fort-knox-survey-says-highly-unlikely/ Why is the treasury afraid to kill the many doubting reports with an independent, sampling audit, supervised by Congress?
doubling down on the lies i see. you specificlly demanded me show the US was the main supplier a claim you made but i never did. which had nothing to do with your lie about china becoming the saudis primary supplier. trying to pretend your claim is different than it was is intellectual dishonest. no your point was that china is replacing the Us as the main arms supplier of the saudis. a claim that is demonstratablely false. again your grasping at straws to defend your gross misrepresentation of the facts. which ignores major weapon purchases and contracts haven't been made with either country and have with the US. the units purchased in 2006 aren't missile launchers. the PLZ-45 is a self propelled howitzer. the MLR of the suadis are the brazilian Astros II MLRS and the american M270. the only mobile missle launchers the suadis have came with their intial missile purchase back in 1988. it should be noted there are only 12 such launchers. your running from your statement cause you know you can't defend it. you flat out said the china is the main supplier of arms to Suadi arabia. again false. remember this? so either defend your misrepresentation or admit you trying pulling a fast one and got got. I will not tolerate your continued intellectual dishonesty. your constant backtracking and claiming you said something other than you did is tiring. your ability to backtrack doesn't impress me. you continue to scramble and continue to show your claims are nothing more than poorly researched claptrap. you continue to make more and more factual mistakes. give it up. your never going to convince me of your misrepresentations. i'm willing to research the hell out of it. you keep mixing things up.
I think your are insincere about taking the position that you believe everything the government says; that is not credible. I think you are misrepresenting the audit of the vault at the NY Fed as being an audit of US gold; it wasn't. I think you are not well informed about the relationship between China's gold production statistics and the associated probable destination of most of that gold being China's reserves; simple math is what is fueling the analysis that predicts that they have multiples of the stated gold. I think you are naive about what motivations China, and the US might have for being secretive about their gold, and deceptive about their stated explanations for their actions; it is a currency war, and you don't tell the enemy anything useful. I think you are being obnoxious to ask for proof of straw men you create out of a simple discussion about what might or might not be fact about China's gold, the US reserves, gold leasing, and repatriation requests. I think you dismiss a lot of smart and successful people as gold bugs because you mistakenly think gold is not money anymore, when in fact it is the only money that has existed for thousands of years that has no counter party risk. Gold is a store of value today just like it was before the US was forced off the gold standard; I don't think you know the facts about what caused that or you are insincere about it. Other countries were draining the US gold reserves which means they wanted gold instead of the dollar. Why would that be (rhetorical question). Thanks for saying what you think. Needless to say, I think we are of different minds about all of this which will make any discussion useless unless you can calmly, and without name calling, address the points above about what I think.
The phenomenon demonstrates, yet again, the infeasability of capitalism: meaningless trends in money that doesn't exist could throw us into another recession and ruin millions of lives. My question is: so when is enough enough? We've seen the absurdity of war, the malignancy of politicians - all of them, BTW: yes, and yours too. Did it take so many events to decide that it wasn't something we wanted? And here we are, modern serfs and worse. Clearly the multitudinous effects cannot be controlled - and it is no good saying that some absurd cabal of money-managers pocketed in a cubicle farm somewhere had an oopsie after a bad Monday meeting, or that China couldn't find some shiny metal in the ground, and so it's off to the unemployment line for everyone, and massive economic havoc. Saying that things are going in the tank because China might or might not have enough shiny metal, ex machina, is as materially reasonable as saying that everyone in Minnesota has to die because Bostonian leprechauns are angry. "Oh - oh, they're angry! Oh, well, best pick my pocket and ruin me then. No, no, I totally understand." Enough, already. If no clique of economists and banks and resource managers can possibly be relied upon not to fuck up and step on their weenies every four years then it is well past time to begin eradicating this nonsense of investments and portfolios and stocks and bonds - and, clearly, none of them can be counted on to manage it. They can't. They screw up in astoundingly pointless ways and cause chaos. It's as though some idiot appointed a gaggle of greedy wizards and entrail-readers to meddle in the affairs of man and then expected us to accept their prognostications as real. It's to the point that it's almost a better deal - no, scratch that, it's well past that point - to pay them simply to sit down, shut up and occasionally move some play money around. Or better yet, we could pay them to play actual Monopoly twelve hours a day. How was your day, honey? Oh, terrible: Jimmy tied up Oregon Ave five rounds out of six! I'm going to report that guy to our play manager! And that would almost be a better system by definition, unless throwing money into the air so that they could stand around in a circle, snatching at it is some kind of workable option. No more. When your children tell you they want to grow up to be economists, just try to turn them to careers in heroin or sexual molestation instead, where their damage could at least be mitigated by actual, real numbers. This all might seem like a rant, but when society crumbles and mankind reverts to a primitive tribal state where people in buttless chaps chase down vehicles with functional gasoline engines, I'd just rather the explanation for the fall not be that someone, somewhere, thought there was 5% less shiny metal in a place somewhere thousands of miles away this one time. Is a comet or a giant radioactive monster just too much to hope for?
Nothing wrong with a major rant once in awhile. Greed might be the real culprit, but the failure is already assured, so being able to point to the cause is not very comforting.
OH MY, have a I struck a nerve? Here is the problem with your beliefs. You have absolutely no evidence to support them. If gold is a store of value as you claim, then why did it go from over 1.9k per ounce to a little over 1.K per ounce within the last few years? This year gold has depreciated 15% from its January high. Over the course of the last 3 years gold has lost 35% of its value. Normal folks, most folks, wouldn't consider loosing 35% a store of value. If you think that is a store of value, I've got some bridges I want to sell you. Year to Date Gold Prices: Please Register or Log in to view the hidden image! And your beliefs are not in anyway fueled by math. They are fueled by conspiracy beliefs. I asked you for evidence which supported your beliefs, you have failed to produce that evidence, in no small part because no credible evidence exists which supports your beliefs. I asked you to provide some evidence to back up your claim that China or the US are lying about their gold reserves. That isn't a straw man. You do believe China and the US are lying about their gold reserves. In the case of China you believe China is understating its gold reserves as part of some undisclosed amorphous war plan. As for the US being forced off the gold standard, did you not read what I wrote in my last post with respect to Bretton Woods? When the Nixon effectively ended Bretton Woods by ending the convertibility of US currency into gold, it was because the Bretton Woods agreement had failed. Countries had left Bretton Woods and become free floating currencies. The US was he last man standing and France in particular was raiding US gold reserves. That stopped when Nixon ended the convertibility of the dollar. Nixon intended to renegotiate Bretton Woods and return to the gold standard. But that never happened. The world learned it didn't need a gold backed currency. Now you can insult me all you want, but it won't change the facts. You can think and believe what you will, and you will. But that doesn't make your beliefs reality. Because the data, the facts, clearly say you area wrong. Just because some people might be "smart" successful people it doesn't mean they are well informed or know anything about economics, Ben Carson being a case in point. Ben Carson is by all accounts a successful neurosurgeon. But the guy knows nothing about economics. He didn't even know who Greenspan was or how the Federal Reserve functions, or who the Treasury Secretary is, or that the Baltic States are NATO members among other things. Being successful and smart doesn't make people immune from the frailties of humanity. Humans like to believe they are right even when they are clearly wrong. It's a human thing. Humans are emotional beings, and emotions too often override logic and reason. Why do you think so much money is spent on political advertising? Here is the bottom line here, you cannot prove any of your assertions. Because it's difficult to prove something that doesn't exist. So all you can do is what you have done, summarily dismiss real fact and reason and do a little ad hominem. One more thing, I'm the only one posting in this subforum who actually has a degree in business and finance and a 30 year career in business and now lives completely off my investments. It helps to have some subject matter knowledge. Please Register or Log in to view the hidden image!
Limited role of government in society, free markets (free people) with the ability to freely trade, under basic law that protects property and upholds contract. No more income tax. Money that is derived through free people freely trading. If some of that money is gold and silver, good. If others of that money is paper, fine. If yet other forms are crypto-currencies or other new interventions, even better.
The rule I wanted is this but did not say it is for those who are imbeciles... "KMGuru, you can ask to exclusively communicate with Billy T saying so. Any one else posts during that time can be deleted. At the end of the exclusive conversation you can open it up for full discussion. During this time, Billy T may not post to others too. This is to reduce the spaghetti-type discussions during specific issues." I gave up because it was a spaghetti type discussions...So, I take back my statement....satisfied? And it is good too...because no one learned where I wanted to go...because they could not read my previous postings...That is very good for the Global Economy since everybody is fixing it....I might have messed it up...and removing staff members to get better world out there...GOOD LUCK... Again, I Take back my statement,after all these years at Sciforums...everything is now an Alibaba and Forty Thieves...Frame work...Thank You...for your Great ideas...I am out of Sciforums Economics...The World could not fix it...and is going to CHAOS...now you people CAN...GO for it... James R said I can do a private group discussion with Billy T, that is the rule apparently....If Billy T agrees after he and I discuss some items...we may do that...provided no one tries to kick me out of the 40 Thieves Den...again Thank You. The topic is based on Chaos and Order...a la Barbarism and Civilization ...Imbeciles may not understand it....
Anyone wants to continue on stuff...here is a website...go for it... http://www.project-syndicate.org/ Thank you.
Please Register or Log in to view the hidden image! While value of the yuan wrt dollar is important more important is this index, coupled to actual trade volumes with different countries. I expect the yuan will continue to appreciate as China's Yuan becomes effective as part of SDR in October of 2016. It will be interesting to see how this index changes when the FED ends the zero rate shown in graph below: Please Register or Log in to view the hidden image!
Well What happens to the yuan depends on what China does with it as the Chinese government controls and pegs the value of its currency. One more point, while the Fed funds rate is very low, it isn't zero. The Fed funds is the interest rate banks pay for money borrowed from other banks at the Federal Reserve. Please Register or Log in to view the hidden image! https://research.stlouisfed.org/fred2/series/FEDFUNDS
Thanks. Your graph is more informative than the one in post 58, which was ony the target, not the reality. You probably know, but many do not, that every day the banks must check to see if they are meeting their reserves balance requirements (It was 10% of demand deposits, as I recall, probably still is) If they don't have the required amount, they borrow (over night loans) from banks that have more than legally required. The lending banks do charge a tiny amount for the loan. I think that rate is called the Federal Funds rate, even though it is not charged by the FED, but by the lending bank. Banks like to lend out all they legally can as that is how they make money, but rarely do they end the day with reserves exactly equal to 10% of their demand deposits, so most are envolved in these over-night loans.
