Monday, April 13, 2009

China Sold Bonds Heavily in Jan, Feb

The New York Times reports that the Chinese government was an aggressive seller of foreign debt - including US Treasuries - in January and February, before reversing course in March.

All in all, China's foreign reserve growth in Q1 was its slowest in eight years - indicating that China may be losing it's appetite for US debt.

If this trend continues to accelerate, I anticipate the US Federal Reserve will have no choice but to print more money in order to finance it's long term debt obligations.  This is risky business, no doubt, as I am not aware of a historical instance where a government printed money this quickly, and did not experience serious inflation.

Folks, this is not meant to be doom and gloom - these are just the facts as I see them.  Now the question we must ask ourselves is: "How can we profit from these anticipated moves?"  There's nothing we can do to save our government from it's own stupidity, but there's a lot we can do to protect ourselves, and even profit handsomely.

Some "money printing" protection positions to consider:
  • Shorting long term US debt (like Jim Rogers)
  • Buy gold and other precious metals
  • Buy commodities, especially agriculture - historically agriculture is quite cheap, and the world is not about to stop eating
Any other suggested trades?  

No comments:

Most Popular Articles This Month