The Dollar, The Dollar, That's all we hear about lately...Who we trying to kid? It's worthless!

Source: RawStory.com




Top Chinese Official Signals Move Away From Dollar



The Chinese are becoming increasingly wary of the growing supply of U.S. dollars, leading the head of the nation’s green energy initiatives to signal a move away from dollar reserves and toward, gold, euros and yen, according to a published report.

“We hope there will be a change in monetary policy as soon as they have positive growth again,” said Cheng Siwei, former vice-chairman of the Standing Committee, according to The Telegraph.

He added: “If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies.”

Siwei also noted that China is especially interested in purchasing gold, but will move methodically in that arena so as not to agitate the market.

“To the degree that they sell dollars and buy gold, Yen or Euros, there can only be downward pressure on the U.S. dollar,” noted Edward Harrison with economic analysis publication RGE Monitor.

“One cannot rely on the words of one Chinese official to represent policy makers in China,” he added. “And Cheng never said the Chinese are now actively diversifying away from the U.S. dollar. Nevertheless, Chinese officials have been talking along this dollar bearish line for months now and I tend to believe their words will lead to action.”

However, some believe China has already begun this diversification.

“[Siwei's] comment captures exactly what observation of gold price action suggests is happening,” opined Ambrose Evans-Pritchard in a Telegraph op-ed. “Every time it looks as if the bullion market is going to buckle, some big force steps in from the unknown.

“Investors long-suspected that it was China. We later discovered that Beijing had in fact doubled its gold reserves to 1054 tonnes. Fait accompli first. Announcement long after.”

Business Insider added: “It’s going to be slow, and the country is loathe to buy too heavily, else it distorts the market more than it would like, but over time it will keep accumulating the shiny metal.”

On Monday gold exchange rates hit a six-month high at $995.19 an ounce, with some predicting the metal may appreciate over and above the $1,000 mark very soon.

“The underlying factor is still the dollar,” said Dan Smith, a UK-based Standard Chartered Plc analyst, according to Bloomberg News. “If we do see a break in the dollar, it could be one of the triggers to take gold higher.”

Sunday, central bank supervisors from all the world’s most powerful nations agreed, at America’s behest, to strengthen the “Basel II” framework for international commerce and increase currency liquidity in all member nations. They also agreed to empower “global supervision” of financial industries, which they said will ultimately result in markets with greater resistance to economic stress.

China has over $2 trillion in U.S. dollar reserves.

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