Good Morning from China!

4 PM yesterday until 6 AM today was for me the sleep of the exhausted.

My friends here know how to work, but your friend here, me, decided rest was warranted before today when I give an address to the Chinese decision makers gathering at a major conference here in Beijing.

The Conference, although quite an important event, has not been a major focus of my trip. It came about because my hosts here are part of the sponsoring organization and therefore it is the polite thing to do.

I find it intriguing that primary raw materials used in China and items considered to be strategic continue to rise in price. Ni is up 50%, Crude is holding in the $66-$70 level and the talks between the Chinese and the Australians on iron ore are tense – they have ceased.

All of the above is occurring when the Chinese are seriously pursuing alternative basket type currency items for diversification of the reserve currency.

Any seasoned market participant knows that a currency’s value, such as the dollar, depends on the momentum of buying as a key to a trend.

I see this as a proper definition of how a reserve currency value impacts international inflation in a period of dire business conditions, a concept that has wholly evaded the Western economic and market thinking with the exception being those of you who apply yourselves to this publication.

Gold has bottomed and will seek $1224 and $1650.

The bear case in the US dollar has its foundation in granite.

Respectfully,
Jim