Monday April 21, 2008 | ${log.root}/lowem.log Inflation, Investing and Everything |
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China's foreign-exchange reserves, the world's largest, surged to $1.68 trillion at the end of March, adding pressure on the government to prevent money inflows from fueling inflation already at an 11-year high. Currency holdings expanded 40% from a year earlier, the People's Bank of China said today [11 Apr 2008] on its Web site. Exports, foreign investment and U.S. dollar depreciation have boosted China's currency assets, hampering government efforts to rein in money supply and inflation. Consumer prices surged 8.7% in February from a year earlier, the most since May 1996. Growing reserves prompted the government to set up an investment arm last year to increase returns. China Investment Corp., a $200 billion fund, bought stakes in Blackstone Group LP, the New York-based private equity firm, and Morgan Stanley. - It's fair to say that the Chinese are positively inundated with US dollars. It's a tremendous amount of money and it's growing rapidly. They are starting to use some of these dollars to purchase commodities and to sign lock-up arrangements with natural resource producers. While the financial markets are looking at multi-hundred billion dollar writedowns, the holders of US dollar reserves are looking at making multi-hundred billion dollar investments into commodities. So, go short financials and go long commodities. See also : 1. China inflation surges to 8.7% in Feb 2008, highest in 11 years (2008-04-21 13:10:39 SGT)
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What commodities do you suggest?
Posted by Ken on April 24, 2008 at 10:50 AM SGT #
Whichever commodities make sense to you :
Energy - crude oil, natural gas, uranium
Precious metals - gold, silver, platinum
Base metals - copper, iron, zinc, nickel
Agriculture - wheat, corn, sugar, soybeans
This is by no means exhaustive, there's a lot more.
Posted by lowem on April 24, 2008 at 11:03 AM SGT #