The white swans of 2020
“Of course, dumping US Treasuries would impede China’s economic growth if dollar assets were sold and converted back into renminbi (which would appreciate). But China could diversify its reserves by converting them into another liquid asset that is less vulnerable to US primary or secondary sanctions, namely gold. Indeed, both China and Russia have been stockpiling gold reserves (overtly and covertly), which explains the 30% spike in gold prices since early 2019.”
USAGOLD note: We mentioned this Roubini analysis in yesterday’s DMR and repost the link here for those who may have missed it. He goes on to say that Chinese diversification is likely to accelerate and that it “could trigger a shock in the U.S. Treasuries market.” Moving from a policy of steady accumulation to something more aggressive could also trigger a shock in the gold market. This is a must read for those who would like to gain a better understanding of the geopolitical forces at work in the financial markets at this juncture.
Repost from 2-20-2020