July 28, 2010

Good Morning:

China's FX Reserves, Uranium

China's FX Reserves

A chart today titled 'trillion, and of that amount China holds about U.S.$800 billion (U.S.$900 billion by other, I think likely more accurate, estimates - for example see '

If U.S.$900 billion is an accurate amount, there is a large gap between China's U.S. Treasury Debt holdings and the widely quoted figure of U.S.$2.4 trillion FX broadly said to be held by China.Some of that U.S.$1.5 trillion difference is said to be comprised of U.S. Agency Bonds (bonds sponsored by, but not guaranteed by, the U.S. Government) - reported at about $600 billion at the end of 2008, U.S. Corporate Bonds - reported at U.S.$150 billion at the end of 2008, and smaller amounts of 'U.S. Equities' - reported at U.S.$40 billion at the end of 2008, and U.S. Short-term Deposits - reported at U.S.$40 billion at the end of 2008.

Even if 18 months after 2008 China's holdings in non-Treasury U.S. Debt and Equities has grown, I think it unlikely it will have grown by the difference (about U.S.$675 billion) between the aforementioned U.S.$2.4 trillion and the aggregate of China's current reported U.S. Treasury Debt holdings and the end-2008 numbers set out in this accounting.

Based on about one hour's research this morning, I have concluded that whatever the difference is today (perhaps something less than U.S.$675 billion) my take is that the difference is accounted for by China's FX holdings in the debt and equities of developed countries other than the U.S.

I have taken the time to spell this out because I frequently reference China's U.S.$ holdings in my e-mails.Everything I read suggests that China is both circumspect and perhaps 'more than a little' secretive in what it discloses about its Foreign Exchange Reserves.

Uranium

An article today titled '

I think this has to be correct, had not focused on it in the way 'Jeffrey Dow Jones' has, and thank him for the thought.

While I don't (perhaps contrary to the norm) think of nuclear energy as 'alternate energy', certainly the uranium price was much higher when oil prices were much higher.

I have always believed those higher uranium prices included a substantive 'speculative value' based on an expectation that high oil prices over time would force substantive 'nuclear power' development.

Personally I believe that nuclear power plants - a proven technology - will proliferate world-wide in time, but I think the time-frame for that is many years hence.