Saturday, December 22, 2012
U.S. Dollar Dethroned. China new game plan-----By Shan Saeed
Welcome to China. Enter the new great country called China. China holds more U.S. government debt than any other country in the world. They currently hold more than one trillion U.S. dollars. Beginning in 2007, China began to get worried.
What if the U.S. collapsed? What if dollars suddenly became worthless? Could they really afford to hold onto $1 trillion forever? If China was worried in 2007, they were downright panicky in late 2008, as it seemed a total financial collapse was imminent in America.
China held massive amounts of U.S. dollars, but they couldn’t sell them without causing a huge drop in the dollar’s value. What’s more, China still needed dollars to buy oil. Yet, China understood it was extremely risky to continue buying and holding dollars, so they began to diversify by buying up massive amounts of GOLD and other precious metals like SILVER. China bought 520 tons of gold in 2011—twice the amount they bought in 2010.
And their gold-buying binge doesn’t seem to be letting up any time soon. In the first six months of 2012, they’ve already bought 383 tons of gold. At that pace, they’d acquire 766 tons of gold by the end of 2012. More importantly, China is following in Iraq’s footsteps. Just as Iraq had planned to trade oil in euros, China began to explore the idea of bypassing the dollar by trading oil directly with oil-producing countries.
You see, while the U.S. was willing to attack a small country like Iraq, I don’t see any way that the U.S. would attack a country as large and powerful as China, especially when you consider that China produces most of the consumer products purchased in the U.S. However, USA is trying to play games in South China Sea through Australia, Japan and Philippines. USA has stationed 2500 troops in Australia and Naval ships in Philippines. I have shared this with Pk Biz, Philip Sigglekow, Rola Ezzedine,Umaer Abid, Kate Otto Swann and Shaun Rein.
CHINA AND RUSSIA'S NEW GAME PLAN FOR THE MARKET
Let me be clear: China’s plans are no longer just plans. They are now reality. As of October 2012, China and Russia reached an agreement and formally announced that they would begin trading oil directly. Russia will provide oil to China, and China will pay for the oil—not with U.S. dollars—but with yuan. By trading directly with oil-producing countries, China would then be able to off-load dollars before they became worthless—and still have access to as much oil as they want.
While this announcement has not been widely publicized or came in the main stream newspapers LIKE Wall Street Paper, Financial Times, New York times or Washington post, it spells the end of the petrodollar. In other words, the U.S. dollar is the world’s reserve currency in name only for the next 25 to 30 years . Now that China and Russia have abandoned the petrodollar, other countries like Iran, India, Argentina, Jordan, South Korea, Venezuela, Luxembourg and Brazil are expected to soon follow China’s lead. And there is nothing the United States can do to stop it!... But it will get pretty severe going forward.
Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.
Posted by Shan Saeed at 6:22 AM
Tuesday, December 18, 2012
Tuesday, December 4, 2012
CHINA'S STRATEGIC ENERGY GAME PLAN----By Shan Saeed
A REAL ALL OF THE ABOVE ENERGY PLAN-----INSIDE STORY.
China accounts for more than 20% of the world's global energy demand. As it is known, the Middle Kingdom surpassed the U.S. to become the world's biggest energy consumer in 2009. Today the race is still neck and neck. And if the market has grave concerns over slower growth in China, somebody might want to tell China that..China's growth is the main reason the country is so interested in securing its future energy supplies. Luckily, China's real targets are much closer to home. It was seen how quickly they were catching up to U.S. oil consumption.
CHINA TO DUMB OPEC
Do you think China is dumb enough to trust in OPEC to keep them well supplied? Can Chinese really expect them to continue getting gouged by Russian fuel exports? The answer to both these questions is a resounding 'No.'
China's Energy Race Heats Up: To say that China is buying up the future energy supplies would be a gross understatement. Over the last few years, I have seen this time and again through their strong merger and acquisition activities. Things are heating up with two of China's latest deals: CNOOC's $15.1 billion buyout of Nexen and Sinopec shelling out $1.5 billion for Talisman Energy's stake in the North Sea. Hey, if you can't beat 'em, just throw a lot of money around. What's interesting here isn't so much the amount of cash that China spent, but rather where they're spending it... Not only are they dishing out billions of dollars in the North American shale boom — but they're more than willing to go anywhere for these resources. In one fell swoop, CNOOC picked up operations in the North Sea (Nexen was one of the leading producers in the UK North Sea), the Canadian oil sands, and the rich shale gas resources in British Columbia. I have known for a long time this deal was in the making. China's newly acquired operations in British Columbia's Horn River Basin is a precursor for the LNG exports that will soon be sent across the Pacific. So, what's next on China's agenda? China will secure South China Sea for gas discovery.
OIL OFF THE RADAR.
Here's a little-known fact about these buyouts: Sometimes it's not just the new oil fields the buyers are after. Truth is the Chinese are also benefiting by gaining access to the technology being used to reach these new oil resources. Take their interest in the various U.S. shale plays, for instance. The real prize isn't production, but rather learning how to extract the oil and gas from the shale formations.
It is no coincidence the Chinese are spending billions of dollars here while trillions of cubic feet of natural gas lie trapped in Asian soil. The next leg of this energy race may not come from new, huge oil field discoveries — but rather from pumping oil it is already known to be there. Don't forget that conventional drilling methods can only produce a small percentage of the total resource. (In the United States alone, there's an estimated 430 billion barrels that are still obtainable.)
CHINA IS HUNGRY FOR SHALE GAS
China's huge thirst for shale gas, a new way to transport gas. Why the U.S. will remain the top spot for shale…China's thirst for natural gas around the world continues unabated. As I have shared before… the U.S. is producing incredible volumes of natural gas… Once she starts exporting her massive new supplies, the market for natural gas will become a global one – with consistent global prices – just like the oil market. And it looks like China will become one of the largest customers. China's liquefied natural gas (LNG) imports could make up 35% of its needs by 2015.
According to contracts already in place, China could purchase as much as 93 billion cubic meters (bcm) of natural gas in 2015. China's economic planning agency, the National Development and Reform Commission (NDRC), estimates the country's domestic production will equal 176 bcm by the same year. [That number is likely high, more on than reported). The NDRC says consumption will increase 20 bcm every year to 230 bcm by 2015.
Natural gas represents only 4.6% of China's current energy consumption. That is far below the global average of 24%. China's government has pledged to increase the natural gas share to 10% by the year 2020. Through the end of Mid November [the most recent available figures]… China had spent $6.9 billion on gas supplies via pipeline from Turkmenistan and Uzbekistan. It spent another $6.6 billion on LNG shipments – the majority of which arrives from Qatar and Australia.
And a report from petroleum giant BP estimates China accounted for around 22% of Asia-Pacific gas consumption and about 4% of global demand. China's demand for natural gas will grow to massive proportions over the coming decades. And it's not the only Asian giant with a thirst for gas… India is the second-most populous country on the planet. Today, gas only makes up 7% of its energy consumption. (Again, the global average is 24%.) And India only produces about one-third of what it consumes.
The biggest boon for China will be the technology to produce the billions of barrels that are currently unattainable using today's techniques...Just imagine what will happen when China catches wind of this technology and starts digging around in its deep pockets of Asia, East Africa and USA. Happy investing with Chinese oil companies. I am bullish on China's energy needs.
Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry risk.
Posted by Shan Saeed at 12:00 AM
Sunday, December 2, 2012
HOW TO NAVIGATE THROUGH POLITICIZED ECONOMY------> By Shan Saeed,
I am writing from an american perspective that holds water in the international economy. It's not likely to happen until US reach much higher levels of inflation and she has something approaching financial repression – but that's exactly where the direction is pointing towards. The mania is likely to be fear-driven much more than greed-driven. Fear is a depreciating asset that hurts the economy badly. Gold is still in the climbing-the-wall-of-worry stage. Mania is still in the future. It's going to happen. I feel confident of that. There's going to be a rush to Gold/Silver. The economies need to learn how to survive and profit in a market bogged down by crippling government regulations, billion-dollar bailouts, excessive money printing, and cronyism; that's how the markets are manipulated at present.
INVESTOR VS WEALTH
But to be frank, it's very hard to be an investor in a highly politicized macro-environment. Investors need to look for real, productive wealth and consistent growth. Speculators, on the other hand, try to capitalize on the chaos that is caused by the myriad of destructive government regulations, taxes, and, of course, currency inflation. That's why I look at all markets, in all countries. But right now there are very few bargains. At some point, for instance, real estate is going to be of interest again. Not right now because governments everywhere are going to raise taxes on it. I believe investors should re-position their portfolio audit for wealth preservation. REAL ASSETS ARE GOLD, SILVER, OIL, LITHIUM, NATURAL GAS, CHINESE YUAN, SHALE GAS, TECHNOLOGY, BIOTECH, HEALTH CARE. I've always been kind of a boy scientist; technology interests me from an intellectual, as well as a financial, point of view. Technology is the real mainspring of human progress. No question about that...I read science magazines sometimes. There are more scientists and engineers alive today than in all the history of the world put together. Hopefully, with the continued blossoming of India and China – where students are generally going into science and engineering as opposed to things like gender studies, political science, and English literature, which students idiotically are doing in the West – there will be even more scientists and engineers 20 years from now. What areas are they going into? Nanotechnology, microbiology, robotics, Stem Cells, Tissue Culture – these things will blossom the way computers have over the last few decades.
MONEY PRINTING OUT OF THIN AIR
Its at the end of the story, not the beginning. More QE – I prefer not to call it that because it's really just printing money. I dont prefer euphemisms, words that are intended to make something sound better than it really is. Euphemisms, like exaggerations, are the realm of politicians and comedians. Anyway, the next round of money printing is going to result in radical and rapid retail price rises. There is no prosperity possible from this; rather the opposite. The Strategic Intent of QE is to discourage people from saving and encourage them to invest tin Stocks and Housing to create artificially high prices.
USA is a completely free market economy, prices would constantly be dropping. That's a good thing, because as prices constantly drop, it means money becomes more valuable. That induces people to save money. When people save, it means that they are producing more than they are consuming – that's a good thing. The way governments have it structured today, however, prices are always going up. That discourages people from saving because their money is constantly worth less, which encourages them to borrow. Inflation induces people to try to consume more than they produce, which is unsustainable over the long run.
Posted by Shan Saeed at 12:23 AM