Abandoning the ship?
Something very interesting is happening right now… Overnight we learned that October saw the largest dumping of US shares by foreigners ($27b!) since the GFC flash crash of August 2007. We also learned that China’s threat of reducing its US Treasuries holdings is very real as they dumped $14b of UST’s in October taking their holdings down to barely above the 2nd largest foreign creditor, Japan (but still at a whopping $1.25t). No surprises that Russia also featured in the October rout with a $10b reduction of their UST holdings and has brought forward final testing of its (non USD) alternative to the SWIFT international clearing system to now rather than May. Additionally we learn that Austria is now joining the list of countries wanting to repatriate their gold, concern is rising over debt servicing of US shale oil ventures at $60 oil, the US passed a $1.1t spending bill that saw their equivalent to our deposit guarantee scheme (FDIC) now cover over $300t of derivatives in addition to the $6t for deposits (all with a total cash reserves of $54b…), and COMEX introduces a precious metals price movement ‘collar’ that ceases trading should gold move more than $100 and silver $3. Maybe, just maybe, foreigners are reading these and other moves in the US as signs of fracturing and reducing their exposure. No coincidence either maybe that China and Russia are 2 of the bigger buyers of gold at the moment…