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India''s Financial Express reports GATA''s research on CRB/gold disparity
By Tom Dyson
DailyReckoning.com
Saturday-Sunday, March 12-13, 2005
http://www.dailyreckoning.com/Issues/2005/WEDR031205.html
At some point the other afternoon, Addison Wiggin
approached our desk with a twinkle in his eye.
"The Japanese are about to start dumping their dollars,"
he said.
We didn't even bother asking for details; the dollar/yen
chart we quickly pulled up said it all. The rate had moved
from 104.67 to 103.70 in a matter of minutes...
The spike was caused by Prime Minister Junichiro Koizumi,
we found out later, as he answered questions before a
parliamentary committee.
"I think it's necessary to have diversity," was all he
said, answering a question on Japan's reserve. But when you
have the international currency markets hanging on your
every word -- currency markets that are extremely sensitive
to the idea of central bank diversification -- these were big
words.
Immediately following Koizumi's comment, top officials at
the Ministry of Finance denied there were plans to dump the
dollar -- but Addison didn't believe a word of it. He thinks
they've let the cat out of the bag.
So does Dennis Gartman. He writes, "We suspect that Mr.
Koizumi gave voice to the one truly great concern that the
monetary authorities in Japan have quietly been discussing
amongst themselves over the course of the past several
months: 'How do we get ourselves out of the positions we
(and the Chinese) have gotten ourselves into regarding
these bulging foreign currency reserve positions so heavily
skewed to the dollar?'"
"As we have long said, it takes buying and a lot of it to
put a market up; it takes a mere lack of buying to send at
market down. We fear the lack of buying ... and that is a
fear far large enough!"
Dennis Gartman fearful? What if he had a $700 billion long
position in U.S. Treasury bonds to worry about?
Japan does. And on Thursday they had to swallow news of a
$113.9 billion budget deficit in February, the biggest
monthly gap ever seen.
On Friday, fingernails would have been gnawed again.
January's trade deficit came in at $58.3 billion, the
second largest one-month shortfall in history.
This news didn't escape the bond market. The 10-year note
jumped 24 basis points last week, representing the largest
one-week down-move in government bond prices since the week
ending April 26, 2004.
How much longer can the Japanese maintain their composure?
We don't dare to blink.
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