Frozen

The blog is frozen for now - maybe in the future I will reactivate it.

China and Russia agree to use Yuan in bilateral exchange

That's the news of the day! China and Russia agreed to start using Youan instead of Dollar in bilateral economich exchange. The Chinese yuan will start trading on Russian exchanges at the start of December, after China allowed the yuan to trade against the ruble in the interbank market from Nov. 22

Here's the source.

Facts and myths about investing in diamonds

I mentioned some time ago that to invest in diamonds, you need to know what you are doing. It is not something accessible to the average retail investor. It is easy to buy a diamond at an inflated price, the price of diamonds are not transparent. This is because price reports are not accessible to average investor. You need to put out a considerable amount od money to have access to some information.
In addition, it is not an investment for ordinary people, even if they already have some capital. The barrier of entry is not inconsiderable. The prices of diamonds have always been and will be high for retail customers, as it customarily applies a high margin of intermediaries. On the other hand, the retail customer, individual investor has no access to investment diamonds at wholesale prices. A wide selection of diamond, the investment can start from 30000 USD. You can invest in diamonds from the amount of 15 grands, but in this case, there is limited room for maneuver applicable only to selected groups of jewels.

Also as I mentioned before the liquidity of investment alternatives in general, and diamonds in particular is low. It is not as liquid an investment as with any eligible security, when the purchaser is located within a few minutes.  Similarily to investments in real estate to sell the diamond you need to find in the final buyer ready to pay for the price, which is accepted by us. In some cases, due to the high value of the gem, it will be an issue for some time.

And finally - diamond framed in jewelry, whatever its parameters, and the certificate will never be treated as an investment.

Reemploying gold standard?

Everyone's talking about it already, so just to mention. The representative of the World Bank said that there gold maybe should be treated as a monetary anchor for exchange rates. It's not a question of a return to the gold standard of how it existed many years ago, but nevertheless it is admitting that the role of gold is not so, as some "banksters" would like us to think.

Robert Zoellick - World Bank president, in an article published in the Financial Times has admitted that it should consider the adoption of gold as a reference point in market expectations about inflation, deflation, and future trends in exchange rates. Although some textbooks consider gold to be "old money" - markets  use it today as an alternative monetary asset.

Here quotation in the original:

"The System Should Also Consider employing gold as an international reference point of market Expectations about inflation, deflation and future currency values. Although Textbooks May view gold as the old money, markets are using gold as an alternative monetary asset today."

Chinese rare-earth metals blackmail ...

Isn't it interesting that the themes of economic war is always appear at the end of the year? Some time  ago I wrote about the concept of global economic wars. Last year's autumn Russians blackmailed us with gas. And recently the currency war subject appeared...

In the meantime, the columns of the international press warn about the Chinese blackmail with rare earth elements. What the hell is it?

The point is that China is the world's dominant manufacturer of the elements necessary in our technological civilization of today, such as cerium, lanthanum, erbium, etc. ... They are necessary for the manufacture of most modern electronics, from LCD monitors starting on hard disks ending. China has about 30-40% of discovered deposits of rare earth metals. Other deposits are also present in the U.S., Canada and Australia, but their exploitation was halted at the end of the 90s the last century, because it became uneconomical due to low cost imports from the Chinese.So the China monopolized the supply of these raw materials, and is now starting to exploit its position in international competition.

This year China will export 40% less than those of raw materials last year. Next year, exports will probably be limited by a further 30%. Japan alone consumes 30 thousand tonnes of rare earth metals, and this year China will export only 24 thousand tons! I think everyone is aware of how this will affect the prices of electronics and we give a competitive edge consumer electronics manufacturers from mainland China. Everybody panics.

Some commentators argue that it is part of our strategy of building competitive advantage for Chinese companies, on the one hand, and informal trade war with the U.S. and Japan on the other.

It seems to be an interesting decade ahead of us ...

World currency war

Headlines recently spread the news of a possible "currency war". What is it? In an interview with the newspaper Financial Times, IMF chief Dominique Strauss-Kahn warned on Tuesday about attempts to rescue the economies of individual countries using the currency exchange rates. According to Strauss-Kahn that could lead to currency war. Well, the problem is that, as the currency strengthens and others weaken, the goods from a country with a strong currency are increasingly expensive, decreasing the demand and the economy weakens. The normal market mechanism. There would be nothing extraordinary, if it was not built deep into the current system of paper currency mechanism, allowing for printing money to control the value of the currency.

In many countries, "the idea that currency can be used as a political weapon" is becoming popular.  The problem is that if some people start to weaken their currency, the other will do the same for the race.

But in the era of paper currencies is the only rational action, to do the depreciation of currency to remain on the surface and rescue the economy's competitiveness. This action is also an unstoppable. Everyone will ask, "If others can weaken and print their currency and there is no guarantee that they will not do that, then why should I not do it, or give anybody any guarantees?". So we are awaiting rally of currencies debasement.

The last attack went in the direction of China. "According to American and European politicians, the Chinese yuan is undervalued by 25-40 percent. Giving Chinese companies an unfair price advantage and increasing the attractiveness and the export of goods from that country at the expense of other states." China, of course, said to leave them out because they do not have a problem ... And they're playing the same stacked deck what every other "honest" player ...

By the way, whether or not you think that the scenario of the World Economic Wars  exercised in front of our eyes ...

Gold as an insurance policy

In its latest report, Gold: Hedging Against Tail Risk, the World Gold Council shows that a modest, consistent holding of gold mitigates the potential for significant loss of value during extreme market events.

In the analysis the World Gold Council shows that during the period between October 2007 and March 2009 an investor with a portfolio of US$10 million experienced an additional US$500,000 financial loss simply by not maintaining a position in gold. The study used a composition similar to a benchmark portfolio, which included an 8.5% allocation to gold, to show that total losses incurred during the period reduced by 5% relative to an equivalent portfolio without gold. In 18 of the 24 tail risk scenarios2 analysed by the WGC, portfolios which included gold outperformed those which did not. The analysis suggests that even relatively small allocations to gold, ranging from 2.3% to 9.0%, can
have a positive impact. On average, such allocations can reduce the Value at Risk (VaR) while
maintaining a similar return profile to equivalent portfolios which do not include gold.

My comment on that is simple. If you want to protect yourself in case of fire, you buy an insurance policy. If you want to protect your money from financial meltdown, you buy gold. And if someone says, that gold does not produce income stream, ask them "and insurance policy does"?