BFI X-Post: Saudi Arabia Flees the Dollar

[Borodog]

Somebody posted this in BFI:

[ QUOTE ]
Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signaling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

http://www.telegraph.co.uk/money/main.jh...bcnsaudi119.xml

[/ QUOTE ]

Also:

China Threatens Nuclear Option of Dollar Sales:
http://www.telegraph.co.uk/money/main.jh...cnchina107a.xml

The dollar is tanking. Gold is up to almost $725/ounce.

Also, an anonymous institution or trader bought put options last month that bet $1B to win $2B that markets will crash by 40% by the 21st, i.e. tomorrow. Not saying that will happen, but I think the very idea that someone very, very wealthy is willing to make such a play is telling.

http://www.financialnews-us.com/?pag...tid=2448565379

Not to say the sky is falling but, uh, I think the sky is falling. [img]/images/graemlins/tongue.gif[/img]

[Howard Beale]

Is this one of those times that I should be happier that I'm 57 and not 19?

[DcifrThs]

if the USD was pegged to anything i'd say this has the makings of a "breaking of the peg" scenario.

i didn't know that all these middle eastern countries have had their currencies pegged to the dollar.

do you have any good links that provide a history of how/when/why this came to be and for which countries?

thanks,
Barron

[Borodog]

[ QUOTE ]
if the USD was pegged to anything i'd say this has the makings of a "breaking of the peg" scenario.

i didn't know that all these middle eastern countries have had their currencies pegged to the dollar.

do you have any good links that provide a history of how/when/why this came to be and for which countries?

thanks,
Barron

[/ QUOTE ]

I'm pretty sure it goes all the way back to Nixon, but am not certain of the details (the arrangement may have changed over the years), and I have no links at the moment.

[Borodog]

Apparently Saudi Arabia's peg goes back to 1986. Still looking for more details.

[Borodog]

Brief info from exchangerate.org:

[ QUOTE ]
The Saudi oil industry has served as the basis for a strategic relationship with the United States that involves political, economic and military ties. Beginning in 1986, the riyal was pegged to the U.S. dollar at a rate of 1USD = SR3.75. This strategy has proven to be very beneficial for Saudi Arabia and several other oil-producing nations in the region, as oil is almost universally priced in U.S. dollars, and the peg helps to ensure that these nations realize maximum monetary value from their exports.

[/ QUOTE ]

[Ron Burgundy]

[Ron Burgundy]

[ QUOTE ]
Also, an anonymous institution or trader bought put options last month that bet $1B to win $2B that markets will crash by 40% by the 21st, i.e. tomorrow. Not saying that will happen, but I think the very idea that someone very, very wealthy is willing to make such a play is telling.

http://www.financialnews-us.com/?pag...tid=2448565379

[/ QUOTE ]

1. The article said by the end of Sept., not tomorrow.

2. How does it affect the USD if the Euro index does go down by 40%?

[Low Key]

[ QUOTE ]
Gold is up to almost $725/ounce.

[/ QUOTE ]

Not that this has anything to do with anything, but I used to work for a PC recycling place. We'd gather barrels of used/old processors, Pentium I/II's, whenever a barrel was full, my boss would go sell at some place that bought it for the gold. He'd usually come back with around 10 grand for 1 barrel. (They did take a long time to fill up, processors are small)

[Taso]

Not that I know anything about the source, but, this article says

[ QUOTE ]
The anonymous trader only stands to make money if the market crashes by a third to a half before September 21st, which is when the put options expire. A put option is a financial contract between two parties, the buyer and the writer (seller) of the option, in which the buyer stands to benefit only if the price of the asset falls.

[/ QUOTE ]

http://www.prisonplanet.com/articles...rket_crash.htm

So, should I tell my dad to stay out of NYC today?