Gregor Weekly Macro Note: Saturday 19 September 2009

• Gregor Macdonald
• September 19th, 2009

The FT Alphaville Blog did a nice wrap-up yesterday | see:  Bull in a China bullion shop | on the phenomenon which I have called The Chinese Silver Download Experience.  Do give it a read because what’s helpful in the FT coverage is the greater level of detail, down at street level, that only on-site reportage can provide. I liked this observation especially: The government mints bars in sizes ranging from 5 grams (which are so tiny they’re actually cute) to 1 kilogram. The prices are updated instantly– they have a Bloomberg screen which tracks the spot price, generally indexed to the Renminbi price in Shanghai rather than New York or London (another sign of Chinese financial independence).

The US Dollar has enough structural problems already without the further weight of a kind of  pan-global assault unleashed in the past 60 days from various global players, but mostly China and Russia. The anti-dollar theme has actually been building all year. We started in mid to late Winter, with tons of IMF/SDR (special drawing right) chatter, but the volume has picked up this summer and seemed to culminate at the World Economic Forum last week. Martin Wolf was quite blunt: “The US is going to default through inflation,” he declared, likening the prospect to President Richard Nixon’s decision in 1971 to unilaterally pull out of the Bretton Woods system of fixed exchange rates, which some analysts argue was a de facto default on U.S. debts. The week ended with Putin of Russia criticizing the US for “an uncontrolled issue(ance) of dollars”, and this came only a day after a fairly meaningful concession to Russia on the issue of Eastern European missile shields.

Amidst all the complexity however the main thrust of the problem is quite straightforward: (this article continues for subscribers through the membership gateway, on the right side of this page.)

Subscribe to read the rest of this article.

More from Gregor Weekly

• Gregor Weekly Macro Note: Saturday 03 October 2009
• Gregor Weekly Macro Note: Saturday 05 September 2009
• Gregor Weekly Macro Note: Saturday 26 September 2009
• Gregor Weekly Macro Note: Saturday 28 November 2009
• Gregor Weekly Macro Note: Saturday 17 October 2009

From the Stocktwits Network

• StockTwits Brunch: Saturday April 4, 2009 (Stock Twits)
• September 2009 (StockTwitsFX)
• Chart.ly Chart of the Day 8/19/09 (Chart.Ly Blog)

Tickers: Bernanke, China, FED, gold, Policy, Russia, silver