Fundamental Trading Diary

Fundamental analysis of the capital markets

Bankruptcy, The Dollar & The Chinese

Gold, Silver & Euro

Gold, Silver & Euro

Since I made the call, the EUR/USD has gone from 1.4119 to 1.4337, Gold from $806 to almost $900, and Silver from $12.75 to $11.655.  Not bad.  My trepidation for shorting, however, was misguided.  I had thought that the plunge protection team would have been more potent.  Evidently they either weren’t much use, or their firepower has been somewhat limited.

The New Bull Market

China has nearly 1.7 trillion in USD reserves as a combination of stocks, bonds and cash.  Incidently, the Dow Jones 30 total market cap now also stands at 1.7 trillion.  Why would China start buying up American companies?  They’ve already started, and they already have a tremendous holding in UK companies.  The Telegraph estimates that they own 9 billion euros worth of the top 30 British companies. It is in their best interests to keep Americans employed and buying their exports, as well as to allocate their already substantial investment into the American economy to service its own interests.

Is Morgan Stanley’s potential purchase by China’s Citic Group the beginning?  That’s wouldn’t be their first banking purchase, either.

This is something to consider when looking for something to buoy these markets.

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September 18, 2008 - Posted by | Uncategorized

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