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Yuan devalued
ricko
Posts: 98,724 ✭✭✭✭✭
OK... with the Yuan devaluation, what can we expect from gold? Short/Long term? Cheers, RickO
0
ricko
Posts: 98,724 ✭✭✭✭✭
ricko
Posts: 98,724 ✭✭✭✭✭
ricko
Posts: 98,724 ✭✭✭✭✭
Comments
to the Dollar/Euro, etc.
Anytime there is turmoil with Gov't debt, gold reacts to the upside..
Personally I do not think it will react much or for very long...
Should continue the downward slide..Greece seems to be working out a plan to recover.
Puerto Rico is another problem/bump in the road...
bob
Give Me Liberty or Give Me Debt
Worry is the interest you pay on a debt you may not owe.
Knowledge is the enemy of fear
It was an official revaluation of gold, which was equivalent to a devaluation of the dollar at the time. It's different now, because gold isn't the basis for currency valuation.
I knew it would happen.
And gold bugs are still bulls.
Will the crap I buy at walmart get 2% cheaper?
<< <i>Will the crap I buy at walmart get 2% cheaper? >>
Not likely Bronco.... most likely an increase coming due to the war on minimum wage...Cheers, RickO
<< <i>Did the US ever devalue the dollar? Was the dollar revaluation in terms of gold in 1933 considered to be a dollar devaluation. >>
Now "devaluations" just float with market cycling. The US dollar was devalued 45% from 1986 to 2008. And then re-valued 35% higher into 2015. After a 7 year run, it seems like it's about time to run back the other way. If the Chinese eventually want to be part of IMF SDR basket of currencies, they'll need to unpeg from the US Dollar and stand on their own.
Knowledge is the enemy of fear
<< <i>Decline >>
I had to edit that question as upon further review that downtrend may be broken. But I'll wait for Roadrunners opinion of this as he knows charts much better than I.
Knowledge is the enemy of fear
that is, if "they" will allow them do so.
Liberty: Parent of Science & Industry
<< <i>
<< <i>Will the crap I buy at walmart get 2% cheaper? >>
Not likely Bronco.... most likely an increase coming due to the war on minimum wage...Cheers, RickO >>
send production overseas buy online.
<< <i>Is the dollar on a 7 yr rally, 4 yr rally or 1 yr rally? >>
All of the above. The more important question is which ones are corrective and which ones are impulsive. Only the 1 yr pattern is so far impulsive looking, though it might just be the C leg of the 4 year and/or 7 yr patterns. When the stock market is finally exhausted, the dollar will probably be as well. I get more use out of watching that USD vs. JPY, AUD, and CAD than watching the dollar directly. The dollar is nowhere near as good as those others when it comes to looking for PM and commodity clues.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>I think the yuan being devalued put a short and intermediate bottom on the price of gold. >>
Yuan action hammered the dollar index. That is what lifted metals. Look for the dollar index to recover.
Give Me Liberty or Give Me Debt
<< <i>
<< <i>I think the yuan being devalued put a short and intermediate bottom on the price of gold. >>
Yuan action hammered the dollar index. That is what lifted metals. Look for the dollar index to recover. >>
Recovery here and now might be difficult as a key dollar support broke. It might take a couple weeks for the dollar to end this current slide. And if the US stock market doesn't get another run towards the all time highs this year, there's a good chance the dollar doesn't get past 100 again either. What really lifted metals was a 4 month slide that just ran out of sellers. Sentiment and COT positioning at absurd levels. The Yuan devaluation was certainly the catalyst that officially turned the momentum. If it wasn't the Yuan, it would have been something else soon enough. The gold buying season picks up in Asia in the 2nd week of August. Every thing was lined up for a turn...all it needed was an "official" spark.
Yuan devaluation and PM soaring explained:
besides of course cycles etc.etc.
China’s decision to devalue the yuan stunned investors and analysts around the world.
They are especially surprised that gold and silver — unlike every other commodity — are soaring on the development.
China announced that its daily price fixing, or “midpoint,” for the yuan going forward would now be based on the previous day’s market moves, rather than purely by the central bank’s policy-based decisions. The yuan is allowed to trade 2% on either side of that price fixing.
The immediate — and intended — result of the change was that the yuan fell 1.9% yesterday. It dropped a similar amount today. In fact, it started falling so quickly that the central bank had to step in to support the currency from going into a nose dive.
Now here’s a key point: The decision to devalue would normally elicit howls of currency manipulation from China’s trading partners. You can imagine U.S. Congressmen elbowing each other to get in front of television cameras to demand retribution.
So the Chinese were clever enough to couch their policy change as simply making making the yuan more freely trading, just as the IMF recently recommended.
Hard to blame the mandarins for doing just what the Western bankers are asking them to do.
But investors don’t like surprises, and the global equity and commodity markets have been roiled by China’s stunning move. The major U.S. stock indices have plummeted through their 200-day moving averages…even tracing out the dreaded “death cross”…and most commodities have also been taking it on the chin.
In contrast — and to the great surprise of most analysts — the precious metals are soaring in response. Gold is up about $20 over the last two days, for example, and the gold stocks are catapulting higher.
Again, the rebound in gold and silver is shocking all the mainstream analysts.
Because the yuan devaluation made the precious metals and other commodities more expensive in China, they expected demand to fall through the floor.
But gold isn’t like other commodities. The Chinese have been buying the metal furiously for the last few years because of a culturally-imbedded distrust of government-managed currencies.
So they were buying gold as a hedge against a yuan devaluation, amongst other potential crises. And gold did its job, rising far more than the yuan has been falling. In other words, gold has protected its holders’ wealth while everything else has crashed.
Look at this situation from the standpoint of the typical Chinese saver: The government has just devalued your currency, and set up a mechanism for further devaluations. Faced with this, are you going to focus your remaining savings on the yuan, or on gold?
China’s move is going to launch domestic gold demand to even higher levels. And not only there, but throughout Asia as well.
Looking at the big picture for China and Chinese gold demand, the yuan devaluation fits in logically as part of bigger plan — one that also answers some questions we’ve been puzzling over for the past few years:
• The Chinese government has been enthusiastically promoting gold ownership amongst its citizens for some time. Why?
• With plenty of anecdotal evidence pointing to a very large accumulation of gold by the Chinese government since 2009, authorities recently announced an updated gold reserve of just 1,658 tonnes — far below the 3,000 tonnes or more that most expected. How could the reserve total be so low?
• The update to official gold reserves was done as part of China’s application to have the yuan join the basket of currencies included in the IMF’s special drawing rights, and become a recognized reserve currency. Few believe the lower gold reserve number was accurate…yet a higher number would have implied a stronger, and more reserve-worthy yuan. So why downplay the gold holdings?
• The IMF issued a preliminary rejection of the yuan for the SDR basket, noting that China should first make the currency more freely trading, and that the yuan was not overvalued, but “fairly” valued. But in the face of this rejection, there were no Chinese protests. Why?
There’s one scenario that would answer all of the above questions.
In short, China knew — likely a few years ago — that it might have to devalue the yuan to keep exports humming and economic growth at sufficient levels. The Chinese knew, however, that a typical devaluation would bring accusations of currency manipulation and perhaps economic retribution.
So they began encouraging gold buying by its citizens, to mitigate the damage from any coming devaluation. (They may have also encouraged any developments that kept the gold price low, to facilitate their accumulation.)
Then they manipulated the process for inclusion in the IMF reserve-currency basket. Rather than report very high gold reserves, they announced a surprisingly low number that, to at least some extent, implied a weaker yuan.
Then, very conveniently, the IMF rejected China’s application to join the club of reserve currencies…while noting that the yuan should be made more freely tradable.
It all fits like a glove, and for the conspiracy buffs, the scenario even implies IMF collaboration.
But is this what happened? I think it’s as viable an explanation as any. And in fact, to believe otherwise would imply that Chinese economic policy is short-sighted and reactionary. And we know that’s certainly not the case.
<< <i>
<< <i>I think the yuan being devalued put a short and intermediate bottom on the price of gold. >>
Yuan action hammered the dollar index. That is what lifted metals. Look for the dollar index to recover. >>
Other than the being "hammered" part, as I feel that's a bit over dramatic, I agree.
If the chart of gold liked like the chart of the dollar you would all say gold is going to da moon.
Knowledge is the enemy of fear
No one had or made a fortune in metals that didn't already start with one, though
They, and you, made the money some other way, then bought the gold to "preserve the wealth"
Some on this board got and get most of their money from "the government"
Liberty: Parent of Science & Industry
<< <i>Some on this board got and get most of their money from "the government" >>
I'm one who earned a government paycheck and retirement. I'm proud of serving my fellow citizens for 33 years. Rest assured that I and countless others earned every penny of it. Until you have stood, with a weapon, on the line that separates freedom from those that oppose it you should probably stick to comments that are limited to those things you think you know.
Until recent years government employees, both in and out of uniform, worked for much less pay than their counterparts in the private sector. Job security, a decent retirement and satisfaction in serving others offset their financial sacrifice. You will someday learn that the biggest critics of government are those that have seen it from the inside just as the biggest critics of war are those that have seen it firsthand. Do not be fooled into believing criticism of those who run a country is a sign of a lack of love of country.
Give Me Liberty or Give Me Debt
Give Me Liberty or Give Me Debt
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<< <i>Very short term, where would this put the silver price in the next 1 - 4 weeks? Conflicting information and generalities are being used in this thread make it tough to gauge the only thing that matters to me, price of PM's. >>
Question is "will China continue to devalue?" If so, dollar index will suffer and PMs will benefit. If recent devaluation holds steady I expect dollar index to recover and PMs to do the opposite.
Update: Reports are that China is looking for an eventual 10% devaluation.
Give Me Liberty or Give Me Debt
Give Me Liberty or Give Me Debt
<< <i>Until you have stood, with a weapon, on the line that separates freedom from those that oppose it you should probably stick to comments that are limited to those things you think you know. >>
I'll just say Thank You
Liberty: Parent of Science & Industry
"By decoupling from the dollar now, China is sending a message that it may be prepared to let it fall later. This means that when the dollar starts to fall in earnest, China may not be there to catch it. This will also mean that the biggest foreign buyer of Treasury bonds will likely be sitting on its hands when deteriorating U.S. finances force the Treasury to begin issuing trillions of new bonds annually. So when the U.S. needs China’s help the most, it will be unwilling to provide it.
In the absence of a Chinese backstop that the U.S. has for too long taken for granted, when the dollar resumes its decline, the fall will be much more pronounced. This will also generate significant upward pressure on both U.S. consumer prices and interest rates that was absent five years ago, when Chinese buying provided a huge cushion to the U.S. economy. In fact, data indicates that China is already paring the amount of Treasuries held in reserve. That means a full blown dollar crisis may not have been averted, but merely postponed, with the dire warnings of U.S. hyperinflation potentially coming true after all."
Give Me Liberty or Give Me Debt
Golly, wouldn't that be wonderful! I hope they're right. Make a fortune.
Liberty: Parent of Science & Industry
"The truth is, the 25 year growth boom in China is just a giant, credit-driven Ponzi. Any fool can run a central bank printing press until it glows white hot.
At the end of the day, that’s all the Beijing suzerains of red capitalism have actually done. They have not created any of the rudiments of viable capitalism. There are no honest financial markets, no genuinely solvent banks, no market driven allocation of capital and no financial discipline which comes from the right to fail as well as succeed."
You would think they would have learned something from the way the US runs its economy.
Give Me Liberty or Give Me Debt
<< <i>
<< <i>
<< <i>I think the yuan being devalued put a short and intermediate bottom on the price of gold. >>
Yuan action hammered the dollar index. That is what lifted metals. Look for the dollar index to recover. >>
Other than the being "hammered" part, as I feel that's a bit over dramatic, I agree.
If the chart of gold liked like the chart of the dollar you would all say gold is going to da moon. >>
Of course these markets are interconnected !
I gave an opinion relative to the OP's question that the recent devaluation of the yuan marks the near and intermediate term for gold. 😊
I give away money. I collect money.
I don’t love money . I do love the Lord God.