Triffin's Dilemma

Jim Rickards, director of market intelligence for scientific consulting firm Omnis, shares his outlook for the dollar.


More info in the Triffin's Dilemma mentioned by Jim Rickards click, here.

China Dismayed By U.S. Money Printing

According to Ambrose Evans-Pritchard of the UK Telegraph:

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing".

...

"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," he said.

China's reserves are more than – $2 trillion, the world's largest.

"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.

The comments suggest that China has become the driving force in the gold market and can be counted on to
buy whenever there is a price dip, putting a floor under any correction.

Read whole article here. This may help explain why China is now a net seller of U.S. government bonds. Even Alan Greenspan is now even warning about the potential for double-diget inflation due to U.S. monetary expansion.

The U.S. is addicted to borrowing, credit, and money expansion; if these trends continue the dollar will be worth significantly less. These trends can be reversed. I don't want to see the dollar one day worth the same as toilet paper.

Zimbabwe Central Bank Wants Gold-Backed Local Currency

The Zimbabwe economy has basically been destroyed by hyperinflation. Now the Zimbabwe central bank is considering making a currency backed by gold and diamonds. The inflation rate in Zimbabwe has fallen to 1% per month in July 2009 from an annual rate of over 200 million per cent in July 2008.

This story was reported by Nelson Banya in Reuters. According to Nelson Banya,

Zimbabwe's central bank governor Gideon Gono on Thursday proposed the introduction of a gold-backed local currency, which was destroyed by hyperinflation and replaced by multiple foreign currencies in January.

A unity government formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai in a bid to end a political crisis introduced multiple foreign currencies to stop sky-rocketing inflation and revive the economy.

But Gono, a Mugabe ally whose reappointment last year has been opposed by Tsvangirai, says the shortage of foreign currencies in the country was hurting economic recovery efforts. In an article he wrote in the state-controlled Herald newspaper, Gono urged the re-introduction of the Zimbabwe dollar to ease the liquidity crunch, but said this was not a call for 'a blind return to the money printing press'.

Read the whole story here.

The Zimbabwean people have been suffering greatly under the tyrannical rule of Mugabe and the hyperinflation he brought about.

Things have improved under the new unity government but things are still very bad and have a long way to go. Read about that here. And here.

Good Places To Buy Physical Gold, Silver, and Other Precious Metals

Every investor should own at least some gold, silver, and other precious metals. They are good ways to hedge against catastrophic events and inflation. I have bought silver from two different places.

The first one is American Precious Metals Exchange. They offer great service and have some of the lowest prices online that I have seen. They offer silver rounds as low as $0.79 over the spot price. It's very easy to order from them just go to apmex.com and order online and they ship your order right away. I have ordered from APMEX in the past and have been highly satisfied by their service.

The second place I would recommend is the Perth Mint. The Perth Mint is based in Perth, Australia but it is no problem for Americans and other foreigners to order online from them. In my opinion, they sell the most beautiful silver and gold coins of any mint in the world. They also sell many limited issue collector silver and gold coins. The Perth Mint also offers a gold certificate program where American investors can buy gold and store it there at the mint. I have ordered online from them in the past and have also been very happy with their service. There website is: http://www.perthmint.com.au/

Falling Dollar; Rising Gold and Silver

The dollar index fell over 1% today.

The US Dollar fell below a key resistance level today.

Gold up over 2% to over $955/oz. today!

...and silver is up over 3% today, nearing $14/oz.!

My thesis on inflation may just be turning out as expected.

Stay tuned...

Marc Faber: Gloom, Doom, and Boom

A must see video from Bloomberg. Well known financial analyst Marc Faber Doesn't See New Stock Market Lows; Favors Gold.

Chinese Economic News

1) In an interesting article in Forbes today. Gordon Chang is skeptical about an economic recovery in China. If Gordon Chang is right this is not good news for the global economy.

According to Chang,

"So, as big as all of Beijing's spending programs are--they could end up being about 18% of GDP and the largest in the world on a percentage basis--they are not enough to stop the country's accelerating decline for more than a few quarters. China was once in a supercycle upward. Now it has turned a corner and is in a supercycle in the other direction. At some point, this will become evident, even to the World Bank. "

Yikes but I'm sure Jim Rogers would disagree with this analysis. It will be interesting to see who ends up being right.

2) China is buying record amounts of iron ore. Read about it here.

3) The US dollar falls as China calls for a global currency. Read about it here.

4) China is trying to hedge against its dollar holdings. Very smart move I say because there are budgets deficits in the United States as far as the eye can see. One way they are hedging is by buying gold.