"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

Trader Dan's free work will soon be available at www.traderdan.biz

Thursday, April 10, 2014

Foreign Central Bank Holdings of US Treasuries back on the Rise again

A while back, I posted a chart of the Custodial Holdings of Treasuries for Foreign Central Banks that revealed a sharp drop in the number held from over $3.021 trillion to near $2.855 trillion, or about $166 billion. At the time I mentioned it was rather remarkable and thus warranted monitoring.

Shortly after the number became public, we had the usual "end of the world" scenarios for the US Dollar as the perma-gold bull community began talking up their usual the "run on the Dollar has begun" thesis. Many were talking Russian dumping of US Treasuries as a move away from the Dollar that was going to snowball. Of course, implied in all this was talk of gold shooting to the moon again.

Well, here we are exactly 4 weeks after hitting the low point in those reported Treasury holdings and we are back to $2.972 trillion, not far off the all-time peak noted above and the largest number since January 30, 2014.

Apparently the run on the Dollar has not begun in earnest among foreign central banks. Here is the chart:


  1. "The truth is that the euro zone hates the stronger euro as they need those export markets to pull them out of their economic funk and that strong currency is making their products non-competitive. "

    Hi Dan,

    But on the other hand, and except mainly from Germany, we have a trade deficit, like in France for example. So a weaker euro would also increase the price of many imported goods, putting even more pressure on the middle class. I don't know if they want a stronger euro, but I think they don't want it too weak either...rather stable and within the current range...

    1. "I don't know if they want a stronger euro, but I think they don't want it too weak either...rather stable and within the current range..."

      You can't have it both ways. When the Marxists running things in the EU confiscate more and more liquidity via taxation they cause deflation increasing the value of the Euro. One way or another (negative interest rates/ bond buying) they will have to counter those deflationary forces.

    2. " you cat have it both ways " tell that to the germans … here in Europe we try but they don't listen

  2. Gold.
    Daily time unit, the CDUR reached the top of its zone, which means that the potential of the recent upwards impulsion may be used up.

    On the 2day time frame, the ma20 has been useful lately, so maybe it will act as a resistance once more at 1325.

    I like to use Andrew's pitchforks among my tools of T.A
    Here is an example showing why.
    Gold prices bounced exactly on the mlh inf of the pitchfork, which helped confirm 1280 as a support area.


    Have a nice day,

  3. Good morning...

    The UST is far from dead.

    Russia, China or any other big holder/buyer of UST's DON'T want to see the US economy implode. It's in NO ONE's best interest to have the worlds largest economy (or even China or Japans etc.) economy tank.
    Far too much at stake for everyone. The US collapsing would have a dramstic effect on all other economies for quite awhile.
    No one wants or needs that all at once.

  4. Yep, investors are fleeing like a stampeding Wildebeest herd into U.S. Treasuries, Bunds, and JGB's.

    Paper rules.

    And, unfortunately, the "Global Implosion" in the precious metals mining sector continues unabated.

    GDX/GLD ratio getting bombed back to the lows as mining stocks are thrown out in disgust as if they were Russell 5000 penny stocks with unusually high betas.

    If you want true protection against wealth destruction, buy U.S. Treasuries and hoard U.S. Dollars.


    1. Somebody has done a three sixty in his stockmarket outlook. You are only here for one thing to bash precious metals. I sold mine so come up with something constructive. Or are you here to beat a dead horse?

  5. Dan,

    I respect your experience and knowledge, and that you question some of the claims that are made by market bears and goldbugsm etc. I would therefore appreciate your explanation of the following, especially as it relates to your post. I am pasting a post made by "Ham-bone" at Zerohedge, as he has expressed the questions better than I could have.

    Thanks in advance.

    "Because I'm dumber than a brick...can anyone review the data of the US's three largest creditors and make any sense of these nations buying habits???


    Jan '08 - Japan owned $585 B in US treasury's
    Jan '14 - Japan owns $1.2 T in US Treasury's
    +$615 B

    Japans consistently ran trade surplus' peaking in '07 but beginning in '08 began running trade deficits and has subsequently collapsed to an all time deficit in Jan '14. Same true for current account. However, since '08 Japan has massively increased their recycling of US dollars into Treasuries while having far fewer dollars to recycle....paradox?

    How did Japan come up with an extra $600 B in US $'s to more than double their Treasury holdings while simultaneously suffering a nuclear energy collapse requiring far greater energy imports...imports of oil and gas necessitating payment in petro-dollars? Where do all the $'s to buy both T's and oil come from???


    Jan '08 - China owned $493 B in US treasury's
    Jan '14 - China owns $1.27 T
    +$777 B

    China ran large trade surplus' (except for their annual lunar new year plunges) but has had positive yet shrinking current account surplus since '08. China also purchased up to 5,000 tons of gold @ $1500 = $240 B


    Jan '08 - Belgium owned $13 B in US treasury's
    Jan '14 - Belgium owns $310 B
    +$297 B

    Since '00 and continuing since '08 Belgium has run a small trade surplus of approx. 10 B/yr Euro's and a current account deficit. Just WTF???"

    1. China's UST holdings are more or less stagnant since 2010 December.


      Japan is a slave of the US and QE in Japan is done to simply support US Deficit.

      Belgium is nothing but US-EU-NATO alliance.


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