The New York Times reports that the Chinese government was an aggressive seller of foreign debt – including US Treasuries – in January and February, before reversing course in March.
All in all, China’s foreign reserve growth in Q1 was its slowest in eight years – indicating that China may be losing it’s appetite for US debt.
If this trend continues to accelerate, I anticipate the US Federal Reserve will have no choice but to print more money in order to finance it’s long term debt obligations. This is risky business, no doubt, as I am not aware of a historical instance where a government printed money this quickly, and did not experience serious inflation.
Folks, this is not meant to be doom and gloom – these are just the facts as I see them. Now the question we must ask ourselves is: “How can we profit from these anticipated moves?” There’s nothing we can do to save our government from it’s own stupidity, but there’s a lot we can do to protect ourselves, and even profit handsomely.
Some “money printing” protection positions to consider:
- Shorting long term US debt (like Jim Rogers)
- Buy gold and other precious metals
- Buy commodities, especially agriculture – historically agriculture is quite cheap, and the world is not about to stop eating
Any other suggested trades?