Unpegged, how does a floating Chinese currency affect gold?

jmski52

So, China has "unpegged" the yuan from the dollar.

Gold has fallen today by $18 or so. Is there a cause & effect going on here?

The yuan is weaker and the dollar is stronger? So this will help get the Chinese economy moving and will increase the price of gold in China while lowering the price of gold in the US?

Maybe this will facilitate the ability of foreign holders of dollars to get out of the dollar without being hurt. If that is the case, the US could be in for a world of hurt as exports drop and as dollars flow back into the US while foreigners unload them.

What say you?

cohodk

Im not so sure it will be "unpegged". Probably just a 2-3% one-off revaluation. Think of it as a goodwill gesture for the upcoming G20 meetings.

mrearlygold

They said on bloomberg that the only loser in this will be the dollar.

That's what they said. Perhaps I should "sift" thru the news a bit and see what progresive news has to say?

Justacommeman

It should be great for base metals as China is a net importer. It may be good for risk trades such as stocks/equities. Therefore, it's probably a negative short term for gold and you are seeing that today I believe. I agree with Dave about the nature of the limited revaluation and it's timing. China was very vague in their statement. I will also note that ever since the day cohodk called Australia nothing more then basically a pile of rocks and had little value------ it's currency has rallied 10% against the dollar. I guess at the end of the day if I were China I would rather own a pile of rocks then a pile of debt that the US represents. The Canadian and Aussie currencies should benefit from the China yuan move. Copper zoom zoom today.................MJ

Joflax

Stronger Yuan at the expense of the dollar means cheaper gold for millions of Chinese, also cheaper gas, cheaper US products etc for what that is worth.
My opinion though, is that there will not be a real revaluation of the Yuan and this is all bluster ahead of the G20.

CaptHenway

Commentary:

link

cohodk

<< <i>It should be great for base metals as China is a net importer. It may be good for risk trades such as stocks/equities. Therefore, it's probably a negative short term for gold and you are seeing that today I believe. I agree with Dave about the nature of the limited revaluation and it's timing. China was very vague in their statement. I will also note that ever since the day cohodk called Australia nothing more then basically a pile of rocks and had little value------ it's currency has rallied 10% against the dollar. I guess at the end of the day if I were China I would rather own a pile of rocks then a pile of debt that the US represents. The Canadian and Aussie currencies should benefit from the China yuan move. Copper zoom zoom today.................MJ >>




If you are going to quote me, then please do so correctly. I believe I said more precisely, that the valve of the Aussie currency was based on a pile of rocks whose value was based in another currency. That is much different than saying Australia was nothing more than a pile of rocks and had little value. There be some beautiful women in Australia and the Outback is a great place to search for meteorites. BTW--Did you know the highest mountain in Australia was named after a Pole?

The Aussie dollar has only rallied back to its downward sloping 50dma and is still down 7% over the last 7 weeks. Surely a dead kangaroo bounce was in order.

BTW--you forgot to mention that I also said in early May that you should have have bot the Yen, rather than the Euro. Coulda been a 10% upside trade for ya.

Copper is headed to $2, if not lower.

Justacommeman

Well I didn't quote you but I did paraphase you and I was close apparently You made the comment AFTER the aussie dollar got whacked from .93 to .80. I think it only fair that I comment on it AFTER its 10% bounce. Looks like the aussie dollar put in a solid double bottom against the greenback at .80 and all the gaps have been dealt with. A very interesting chart.

I own the YEN. I own no Euros and haven't for a year. I was completely out of the dollar until last month as you know. What I have now is mostly as a hedge.........Still love the Cando.

What's your time frame on $2 copper? If you are right on $2 copper then the DOW will be at 8500 or less in my opinion. FYI- China would LOVE LOVE LOVE to buy $2 copper. TIA, MJ

BBQnBLUES

Pssst !!!

Wanna buy sum Chinese Yuans ? or trade

derryb

<< <i>They said on bloomberg that the only loser in this will be the dollar.

That's what they said. Perhaps I should "sift" thru the news a bit and see what progresive news has to say? >>

Sift Here

cohodk

<< <i>Well I didn't quote you but I did paraphase you and I was close apparently You made the comment AFTER the aussie dollar got whacked from .93 to .80. I think it only fair that I comment on it AFTER its 10% bounce. Looks like the aussie dollar put in a solid double bottom against the greenback at .80 and all the gaps have been dealt with. A very interesting chart.

I own the YEN. I own no Euros and haven't for a year. I was completely out of the dollar until last month as you know. What I have now is mostly as a hedge.........Still love the Cando.

What's your time frame on $2 copper? If you are right on $2 copper then the DOW will be at 8500 or less in my opinion. FYI- China would LOVE LOVE LOVE to buy $2 copper. TIA, MJ >>



I never said to short the Aussie dollar at that time. Please do not make it appear as though I did. I merely stated its shortcomings. The chart is interesting and easy to read. Both the 50 and 150dma are turning lower. All you have to do is draw an arrow at the end of those moving averages to see where its going.

I like the Cando as well. Afterall, they have the backing of the US military.

Copper should be at $2 within the year. It's drop does not have to be accompanied with a drop in the DOW. Although I would welcome it. Am I the only one who likes to buy things cheaper? Of course the Chinese would love $2 copper. They are "swimming" in copper now and would love to replace their massive stockpiles at lower prices. They would probably like it even more at $1--if they would let it drop that far. FWIW--plot a comparison graph over the last 30 years of copper and the dollar.

Justacommeman

You are very sensitive these days . No, I did not mean to insinuate that you were professing to short the Aussie dollar with your comments at that time. I meant to insinuate that you were crowing about the dollar. You were just reporting the drop of the Aussie dollar at that moment. I was just reporting on it's subsequent 10% bounce. It was a touche' moment..........

I can't see $2 copper without a much much lower DOW.

I also do not think China is swimming in copper. Don't believe everything you read. Regardless, I will buy you a Foster's when we meet up. Hopefully, using my strong Aussie currency

MJ

cohodk

Not sensitive. Im just a stickler for accuracy. Its EVERYTHING in my business.

Fosters was my piwo of choice when I lived in England. Maybe we can meet in Canada, I have a few Loonies laying around.


I havent read anything about China and copper. What do the pundits say? I prefer to do my own research and can see copper wharehouse levels very near multi-year highs. A month ago I said copper was "grossly" overpriced at $3.50. It has since fallen 20%. Demand for copper is virtually non-existant in the USA and Europe, and China can only build so much. It is much more appropriately priced at 2.80 than 3.50, but any global weakness will drop it to 2.00 in a heartbeat.

Interesting will be the effect of increased wages for Chinese workers.

Justacommeman

I'll meet you anywhere for a beer.

Most copper shorts I know I got KILLED on the run up to $3.50.

MJ