China Warns about the Dollar
China Warns About The Dollar
(I know a lot of you saw this article already, but I am compelled to add my 2 cents, especially since the reader who has incessantly busted my stones over my bearish dollar call has disappeared)
When China speaks, the U.S. should listen:
Any appreciation of the dollar is “really temporary” and a devaluation of the currency is inevitable as U.S. debt rises, Yu said in a speech in Singapore today…Such a huge amount of debt is terrible,” Yu said. “The situation will be worsening day by day. I think we are one step nearer to a U.S.-dollar crisis.
Here’s the link if you have not seen the article by now: LINK
This guy also goes on to say that “China should reduce its holdings of U.S.-dollar assets to diversify risks of ‘sharp depreciation…’” Essentially this is a statement telling the world that continued support of the U.S. dollar by China will be limited at best. Translation: the dollar is going a lot lower.
Make no mistake about it, even though the comment above came from “a former advisor to China’s central bank,” when the Chinese Government wants to make a policy statement, it’s usually done through “representatives” like this.
As per the graph below, you can see that the dollar has broken a head-and-shoulders chart formation, which usually implies much lower price levels are to be expected:
