May 28, 2010
– Comments (2)
What, you still expecting inflation near term? While they are pushing gold on TV? After they were telling you to sell your gold on TV when it was cheaper? You gotta be kidding right?
Peter, I'm a fan, but you can't have it both ways. Either we are in a Depression like you say and we will eventually sell off 70-90% to complete it, or the 50% equities drop we saw in 2008/09 was the bottom and we are in a recovery. If the worst is over, except for the period of extreme bond weakness you predict, then saying we are in a Depression is too strong.
As for China, they can continue to hold hedged Euros and Dollars, and lock in gains with each round of rumors. Even if they don't initiate the market manipulation themselves, the rumors will continue as will hedging profits. Each time U.S. or EU officials fly to China to urge continued dollar or euro support, the respective minions can claim success. By continuing to hold Euros and Dollars as pleaded, China gets the added benefit of buying meek stances on international political issues. This is called a win-win, except from the perspective of China where it would simply be a win.