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The Fall in International Reserve Assets

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Published : October 30th, 2014
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( 6 votes, 4.7/5 ) , 3 commentaries
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Category : Editorials

Something important has happened since August 15, this year. I have been following  global central bank "international reserve assets" (excluding gold)  as tallied by Bloomberg, for the past 18 years, and I have seen them increase steadily over the whole of that time.  My source has been Doug Noland's "Credit Bubble Bulletin"  at www.prudentbear.com.

In September of last year, I wrote an article, "The Stalling Growth of International Reserves" published on my website, www.plata.com.mx

Now the quite extraordinary news is that International Reserve Assets are not just stalling, they are actually going into reverse.

On January 3, 2014, the figure stood at $11.546 trillion dollars and grew to $12.024 trillion on August 15, 2104, a growth of $478 billion dollars.

From that date to October 24, 2014, International Reserves contracted $172 billion dollars to $11.852 trillion dollars; a decline of 1.43% over a period of 11 weeks.

Over the course of the last 18 years, there has never been a period during which International Monetary Reserves decreased.

I should be glad hear some explanation of the reversion of the long trend in the accumulation of Global International Reserve Assets.

husalp1932@gmail.com

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Hugo Salinas Price is the founder of Mexico's Elektra retail chain. Hugo Salinas Price currently is retired from retailing and focuses on being a proponent of a sound financial policy for Mexico[1]. Salianas Price is President, Mexican Civic Association Pro Silver, A.C
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I presume you are mostly counting dollars and Treasury bonds and not gold as you mentioned. The world is de-dollarizing and we should start seeing more reserves converted to gold. Also there is a trend to directly trade bi-laterally and skip paying the gringo middleman. This would make the need to keep dollars or any reserve less as a direct exchange rate would facilitate trade without the need for a reserve fund.
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Just thinking out loud, but what if you thought that some or all of the foreign reserves held at your central bank were suspect as to long term value?
Why would any sane person, corporation or country hang on to a declining asset?
Mightn't a shopping trip to buy tangibles in the country of origin be called for?
I would think tangibles in hand beat a fist full of IOUs aka government bonds and notes.

It is no longer a foreign reserve once it returns to the originating country.
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Could the increase in the value of the US$ have anything to do with the small decrease in International Monetary Reserves over the past 11 weeks?
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I presume you are mostly counting dollars and Treasury bonds and not gold as you mentioned. The world is de-dollarizing and we should start seeing more reserves converted to gold. Also there is a trend to directly trade bi-laterally and skip paying the  Read more
sam_site - 10/30/2014 at 2:06 PM GMT
Rating :  3  0
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