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September 12, 2009 – Comments (2)

Financial Armageddon let me to The Aleph Blog and good post about stories that should be making the media.  As I followed commodities fairly closely, this point got my attention.

China is overstimulating businesses through loans and they are buying up commodities that they don’t need now, leading to a possible correction in commodity prices.

 I have been wondering where the support for commodities has been coming from.

There are other issues that I think are all good to read.

2 Comments – Post Your Own

#1) On September 13, 2009 at 2:31 AM, uclayoda87 (29.31) wrote:

The Chinese government is encouraging its people to buy silver and gold.  In a not so subtle way they are telling their people to divest from the US dollar and buy hard assets, which are commodities.

The Chinese government is even looking into issuing debt, based on their own currency.  Why?  They don't need more money to fund their activities.  But if they plan to dump the US dollar soon, they may want to offer the world another place to stash their cash, in place of US Treasuries.

So I believe that the rise in commodity prices based on US dollars makes sense.  The dollar is just losing its value.

Just a thought.

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#2) On September 18, 2009 at 1:06 AM, cdulan (91.22) wrote:

China lent out $1T USD in the first seven months of this year.  That is equivalent to 25% of their GDP.  That is where the support for the commodity boom in China, and lots of other things going on in China, is coming from.

 But I see here http://lockstep-investing.blogspot.com/2009/09/stimulus-watch-i-hope-aussies-are.html that the loose monetary policy of China has been slowing down and that commodity purchases have slowed with it.

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