A Case for holding US Dollars?

madaw1 said:
Why not?-I'm just curious. If a country has a lot of US debts - a lot of gold as well ,but is not able to pay interest on the loan in cash-why US would't accept gold as collateral?
Edit: This is hypothetical question-I don't know any country with a lot of gold and with big US debts.
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I can only think it's the way the loans are structured and how the Fed can balance its books and what it does with the USD when it is returned (profit is remitted to treasury and the principle is destroyed??) ie the loan is made in USD so it can only be paid back in USD. I'm going to check another book so if anything crops up I'll let you know.
 
mmm....shiney! said:
I can only think it's the way the loans are structured and how the Fed can balance its books and what it does with the USD when it is returned (profit is remitted to treasury and the principle is destroyed??) ie the loan is made in USD so it can only be paid back in USD.
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That could be the case-like any other loan even in Australia,if it's structured in AUD -can't be paid in other currency or other form of security-But I don't know if this apply to Fed as well...
 
I think I’m wrong. The Fed doesn’t lend the money. The country or corporation in need of a loan issues bonds in the currency of whatever country they are issuing the bonds. :D So if an Indian government or corporation wants to borrow USD for some reason, it sells bonds on the US market in USD.

Let’s say Tata issues bonds in Australia. These bonds would be issued in AUD, with an agreement that upon maturity the full value of the bond would be repaid, as well as interest on maturity or at agreed upon pre-determined points in time eg every 6 months or whatever. @madaw1 Hedge Fund buys AUD1million from Tata with the expectation that in say 5 years it gets its AUD1million back plus interest. If Tata were to insist upon paying its debt back in gold, I can foresee some logistical complications let alone possible legal ones as far as auditing and tax requirements go for the @madaw1 Hedge Fund when the bonds mature and it has to report its activities.
 
in China, they have RMB GOLD OIL contracts
its like Iran sell OIL and get RMB then Iran buy GOLD in RMB
so there is exchange to settle them, in free markets many things can get done
 
10 years gold chart in different currencies. It may surprise you!

If you look at the price of gold vs 10 years ago, in aud, gold has gone up 90%, but in sgd only 35%, 75% in eur, 70% in gbp and 40% in usd.

This explains why gold investment is so unpopular in Singapore until today, the local precious metal forum is dead for years, is still dead, while there is a lively community in Australia and the UK.

Looking at the charts, it is highly probable that the price of gold will have a lot more to rise in usd and sgd.

inr

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aud

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jpy

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gbp

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sgd

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eur

3nFIDte.png


usd

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Yes new highs in many currencies but still room to move in others. Hence why calls for 2k USD gold are realistic.
 
66rounds said:
Yes new highs in many currencies but still room to move in others. Hence why calls for 2k USD gold are realistic.
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Agree. The charts for inr, aud and jpy are similar to each other. Very interesting. I don’t know much about currencies but I think the sgd strength is unsustainable, only question is when it will turn. This is why gold is even more of a contrarian trade for me. Betting on a change in trend, so to speak. Or betting on a weakening of the usd since the sgd tracks the usd.
 
fishduck said:
I would like to discuss whether there is a case among anyone here for holding US dollars at least short/mid term as either a diversification of a temporary hedging strategy.

Apparently this topic is gaining momentum at least in Asia where many people are starting to treat this as a haven play. They are treating US dollars with an equal weight of importance to gold...

...Would anyone here hold US Dollars or any other currency (except for AUD for obvious reasons) and if so, why?
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Short answer is yes if you hold significant paper assets, as a hedge and especially a major downturn like 2007-8, for it is the world reserve currency and assets will be liquidated into it, making it sought after.

In the GFC, “quantitative easing” followed. I don’t think it was all that long after that the AUD saw parity with the USD and for a very brief time was even more valuable. After that wave of fiat creation made its way into the broader economy, silver was one of the boats that rose with the wave and was unceremoniously dumped on a shoal.
 
fishduck said:
Would anyone here hold US Dollars or any other currency (except for AUD for obvious reasons) and if so, why?
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I took a position on the USD via the ETF USD when our dollar hit .66c 9 days ago. So far it showing good gains with more to come today. The AUD is collapsing at a fast rate.
upload_2020-3-13_8-18-30.png
 
Fiats will mostly fall relative to each other since they are connected and all fake.
Dont expect the dollar to prop anything up at this point..we are weeks from being Venezuela!
 
JohnnyBravo300 said:
Fiats will mostly fall relative to each other since they are connected and all fake.
Dont expect the dollar to prop anything up at this point..we are weeks from being Venezuela!
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Look at it at our point of view. The AUD is going down the toilet fast, virtually against all currencies. So any profits to be made by holding the USD is good. When this slippery slide is over and I see the USD stalling then I am out.
 
Today's action, up 2.72% in 10 minutes. AUD down to .6277 USD.
USD
15.490 15.500 15.490 +0.410 +2.72 15.470 15.490 15.470 39,058
 
I am watching the USD Index. Close to clearing 100. It is very possible will draw a chart like the recent gold/silver ratio blasting through the (it will never go past) 100 mark.
I wonder what gold will do? Not so long ago on the run to 1700 dollars, the dollar and gold were running together, now it seemed to have reverted to inverse relationship. Interesting times.
 
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