Jim Rogers Buying the Yuan

[ItalianFX]

Just read this article: Jim Rogers Shifts Assets Out of Dollar to Buy Yuan

and he says that
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Jim Rogers, chairman of Beeland Interests Inc., said he is shifting all his assets out of the dollar and buying Chinese yuan because the Federal Reserve has eroded the value of the U.S. currency.

"I'm in the process of -- I hope in the next few months -- getting all of my assets out of U.S. dollars," said Rogers, 65, who correctly predicted the commodities rally in 1999. "I'm that pessimistic about what's happening in the U.S."

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It goes on to say, [ QUOTE ]
he expects the Chinese currency to quadruple in the next decade and that he is holding on to commodities such as platinum, gold, silver and palladium.

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and he is so sure of the yuan that he says [ QUOTE ]
"I don't see how one can really lose on the [yuan] in the next decade or so. It's gotta go. It's gotta triple. It's gotta quadruple."

[/ QUOTE ]

He's also buying more yen due to the carry trades.

So besides practically quoting the most important parts of the article, does Jim Rogers know what he is talking about, what can we learn from him, and should we all be following his advice?

Any other discussion would be informative as well.

[tippy]

Actually his trade all boils down to the rest of the G7 putting enough pressure on China to let their currency float freely. Once it comes off of an artificially depressed state, it has nowhere to go but up. Unfortunately China is going to fight the pressure of the G7 because once the currency floats and skyrockets in value, their export economy is dead.

Rogers knows the high up guys and he knows how much pressure can be put on China. He knows they will cave eventually. Good luck though being a small Forex trader and getting in on this yuan trade.

[DcifrThs]

these are both positions we've talked a ton about in BFI.

long yen, long yuan. he is exaggerating a lot since if the yuan flies up the chinese communist party will crap themselves lol.

but seriously, they have to slow the economy slightly and have acknowledged that by raising rates (in a small way). they are still accumulating huge reserves though so they need to raise rates even further.

the good news for china is that unit labor costs are STILL falling despite 15% increases in wages since productivity is increasing even faster.

they can keep the yuan where it is for a while, but evenutally they need to raise it (and it will raise itself if it is oversold by the chinese central bank for too long).

this is one fo those spots where the market is just not efficient b/c you have such a huge player out to peg a currency without regard for profit. long the yuan is definitely a great trade...but i don't know exactly how to execute it since you can't own chinese currency [img]/images/graemlins/frown.gif[/img]

i'll search around a bit though.
Barron

[john kane]

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Good luck though being a small Forex trader and getting in on this yuan trade.

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i'm going to search around some spreadbetting sites, but igindex don't offer yuan but offer all sorts of other currencies.

ill post if i find anything useful.

[DcifrThs]

well, you can buy the yuan here:

CME renminbi futures

it is about 125k per contract and i forget what the margin requirements are, but if they are 50:1 as quoted for other futures contracts tthen it is only a 2.5k or so margin requirement...

it might be more though...like at 20:1 it is almost 6k margin.

Barron

[kimchi]

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but i don't know exactly how to execute it since you can't own chinese currency

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I don't know much about the Yuan, but what do you mean by this? You mean there are regulations against owning Yuan, or it's just not practical to byu? I used to have several small bank accounts: USD, GBP, EUR, KRW and CNY. There was only a few K in them, but they weren't too much trouble to open.

[ItalianFX]

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but i don't know exactly how to execute it since you can't own chinese currency

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I don't know much about the Yuan, but what do you mean by this? You mean there are regulations against owning Yuan, or it's just not practical to byu? I used to have several small bank accounts: USD, GBP, EUR, KRW and CNY. There was only a few K in them, but they weren't too much trouble to open.

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The yuan isn't a free floating currency, it is pegged. (I think) So that means there isn't a "market" for it like the other currency pairs.

[Shoe]

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but i don't know exactly how to execute it since you can't own chinese currency

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I don't know much about the Yuan, but what do you mean by this? You mean there are regulations against owning Yuan, or it's just not practical to byu? I used to have several small bank accounts: USD, GBP, EUR, KRW and CNY. There was only a few K in them, but they weren't too much trouble to open.

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The yuan isn't a free floating currency, it is pegged. (I think) So that means there isn't a "market" for it like the other currency pairs.

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While the yuan is pegged, it is not going to down in value. Everyone in the world, including China, knows that the yuan is undervalued. If it were allowed to trade freely like the rest of the currencies, it would dramatically increase in value. The only thing stopping it is China's political/economical clout.

Eventually, it will reach fair value. But there is no guarantee as to how soon that will happen. I also don't know of a good way of purchasing yuan, but I would love to buy some if I could find an easy way of doing so.

I have read in several places that investing in the Yen is a good way to invest in the Yuan, as for some reason, the Yen is somehow tied to the Yuan and/or will benefit from the yuan increasing in prices. I don't know the exact details behind this though so do your own research before buying any Yen.

But until China is willing to open up their economy, all we can do is ::yuan:: and wait.

[DcifrThs]

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but i don't know exactly how to execute it since you can't own chinese currency

[/ QUOTE ]

I don't know much about the Yuan, but what do you mean by this? You mean there are regulations against owning Yuan, or it's just not practical to byu? I used to have several small bank accounts: USD, GBP, EUR, KRW and CNY. There was only a few K in them, but they weren't too much trouble to open.

[/ QUOTE ]

The yuan isn't a free floating currency, it is pegged. (I think) So that means there isn't a "market" for it like the other currency pairs.

[/ QUOTE ]

While the yuan is pegged, it is not going to down in value. Everyone in the world, including China, knows that the yuan is undervalued. If it were allowed to trade freely like the rest of the currencies, it would dramatically increase in value. The only thing stopping it is China's political/economical clout.

Eventually, it will reach fair value. But there is no guarantee as to how soon that will happen. I also don't know of a good way of purchasing yuan, but I would love to buy some if I could find an easy way of doing so.

I have read in several places that investing in the Yen is a good way to invest in the Yuan, as for some reason, the Yen is somehow tied to the Yuan and/or will benefit from the yuan increasing in prices. I don't know the exact details behind this though so do your own research before buying any Yen.

But until China is willing to open up their economy, all we can do is ::yuan:: and wait.

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i'm not so sure you understand exactly how the yuan is kept undervalued. specifically, the chinese central bank (people's bank of china) borrows yuan from its citizens (via regulations about savings etc.) and sells it for dollars.

alternitavely, it could print yuan, sell them and purchase dollars....it isn't the chinese clout that keeps the yuan down. it is their market intervention.

what i meant by "you can't buy yuan" is that LITERALLY, you cannot own yuan. at least as far as i knew/know, the chinese govt makes it illegal for outsiders to purchase yuan from outside of china (i.e. you must go to china). this may be simplifying the issue (there could be a ton i'm missing here), but that was my understanding.

now i know that you can at least purchase renminbi (yuan) futures from the chicago mercantile exchange. i posted the link to get them. they cost about USD 125k but only require a maintenance margin of less than 10k (couldn't get an exact quote but 50:1 would be 2500 and 20:1 would be 6k).

i also think they are quoted in yen for some reason and you may have to do a currency cross to get it but if you get on the phone with either interactive brokers or the chicago merc, i'm sure you can get the exact methodology for purchasing the futures contract.

finally, the yen doesn't respond or correlate to the yuan enough to be anywhere close to ag ood enough proxy. it is decent, but just not tradable imo.

Barron

[pig4bill]

If you buy them in China, can you take it outside of the country? I know a business owner with an office in China...