market: gold down, usd up

  1. 22,691 Posts.
    As expected, the application for US Bonds by Central Banks was very good. Caribian Banks seem to play a role lately.

    Tonight the Current Account will be presented and it will be interesting to read the size of the deficit.

    Gold slips in wake of capital flows data:
    http://cbs.marketwatch.com/news/story.asp?guid=%7B326C5AF9%2D998E%2D45AA%2DA717%2D4BB724AA0967%7D&siteid=mktw

    USD 82.13 (+0.21) oil 54.98 Euro 1.33 gold 440.5 silver 7.38
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    COMMENT:
    Sofar, I haven't found any article discussing the strategic disadvantages of having an US industry in China, so I thought it worthwhile doing something on it.

    Imagine that more and more industries shift to China: Cisco is thinking of shifting their R&D department there as well.

    At the moment the US imports 40-45% of goods from China and I believe that China imports 16% from the US. I would say that a significant component would be mining machinery and equipment.

    I am not sure if Caterpillar is already there but the point is that the more China produces using US factories on their soil, the less it can import from the US.

    There is now talk of producing cheap cars in China for the US market. The US Unions will be against that but assume a quota is approved for the US.

    That would make things tougher for the US industry and the US exports will also not increase in constant dollars as the Chinese will take over a lot of the US trade with third countries with regard to cars and heavy construction/mining machinery.

    Altogether, not good for the USD.

    Unless something is done that is where we are heading.



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