This Is What Gold Does In A Currency Crisis, China Edition
Currencies / China Currency Yuan Jan 10, 2016 - 03:49 PM GMTBy: John_Rubino
As China’s leaders figure out that pegging the yuan to the dollar while quintupling their debt in five years was a colossal mistake, they are, apparently, concluding that the only way out is a sudden, sharp currency devaluation. See Pressure on China central bank for bigger yuan depreciation.
Chinese citizens, meanwhile, are anxiously awaiting tomorrow’s market open while mentally repeating the same three lines:
Sure am glad I bought that gold last year.
Wish I’d bought more gold last year.
Wonder what I’ll have to pay for gold next week…
Here’s what that looks like in graphical form:
If China does spring a 15% devaluation on the already-wound-too-tight leveraged speculating community, the impact should be, well, amusing for sure, but otherwise a little hard to predict. About the only thing that can be said with near-certainty is that the above chart will have to be updated with much higher left and right axes.
By John Rubino
Copyright 2016 © John Rubino - All Rights Reserved
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