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China and the 1 Trillion Dollars (for starters)
By Walter Burien -

As we all know, first cheap and now high-tech Chinese goods have saturated the US Market for well over a decade now.

This created a very large strain on the balance of trade between the US and China.

Additionally, the Chinese government to keep that imbalance running at full steam kept their currency the Yuan pegged to the dollar so that their currency would maintain at a fixed "low" rate to the dollar and thus their manufactured goods would remain cheap in comparison to US Goods where their currency would not appreciate to the dollar and thus cheaper Chinese products.

The US Government and manufactures here in the US were not happy with China's currency strategy and for the last several years put the pressure on China to stop pegging their currency the Yuan to the dollar and move to a basket of currencies to determine the Yuan's value. Well, after severe pressure exerted by the US Government, about six months ago China buckled and un-pegged the Yuan from the dollar and went to a basket of currencies pegged to the Yuan.

This left China holding about 2.5 trillion dollars now up for investment.

Hold on to your hats, here comes the new Merrill Ling or Smith Chang Investment Company to the US. On Friday, March 9th 2007, China announced they were starting an investment company this week in the US and 1 Trillion Dollars would be transferred to the company at this time designated for US Investments and maybe another Trillion Dollars on the way soon. This will make the new Chinese investment company the largest liquid capital for investment company in the US.

For all of those precious metals enthusiasts the following clear statement by China should put a smile on their face. China stated they would use 1/3rd of their investment capital to buy precious metals. Look-out Gold, Silver, Copper, and Platinum, the Chinese are a coming with a trillion or two to bang up your prices. May start this week but in any event, it is a coming.

China will also be investing in the real estate and Stock market also. Isn't it nice that the Chinese will help stabilize the US economy with all of those dollars it has amassed at the cost of US jobs hear. Well, I guess one back has to scratch the other.

China said they still would continue to buy US Treasury notes, so Uncle Sam will still be subsidized on their debt.

This move by China will cause problems in their own country as orders for goods decline, but then it is about time they gave the US a fair shake in return for the unprecedented growth realized by their own economy over the last decade from those dollars flowing in.

We are looking at one of the major market events of the decade here folks. Keep your eyes open, sit back, and enjoy watching the fun, the Chinese are a coming.

Mark these prices down today, and see where they are one month from now:

As of 03/13/07 - CLOSING PRICES: Gold $643.10, Silver $12.73, Copper 2.81, Platinum $1,204.00

And let's not forget the Dollar Index price: 83.40 (a paradigm shift in foreign currency trading with money flooding into the US for investment is about to occur)

To view all commodity prices:

Heads Up, the Chinese are a coming!

Walter J. Burien, Jr.
Prior CTA (Commodity Trading Advisor) 1978 - 1992

PS: As always, "Follow the Money!" The next run up in the metals could be dynamic. Thursday the 15th is my guess for when the start of the push will begin. The Chinese may use derivatives for metals, but delivery of the real commodity has always been China's shown strategy. When done, the fundamentals of supply and demand in true form will come to play.

POST NOTE FROM THE EVENING OF 03/13/07: It appears that the big players are shaking the cage to run off public holdings of Precious Metal derivatives, and then as Jackie Gleason use to say:

"To the moon Alice, to the Moon!"

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