What to do with US$ raised from dumped US Treasuries?

January 24th, 2007

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Recently, in Bloomberg, we saw this news: OPEC Dumps $10.1 Billion of Treasuries as Oil Tumbles. In our previous article, Awash with cash?what to do with it?, we asked this question: What would these countries [mainly China and Middle Eastern oil-producing nation] buy to replace their US dollars [of which a significant proportion are parked in US Treasuries]?

This is significant.

While this news is hardly surprising, it serves as an indication of what is likely to be a long-term trend. What would those OPEC nations buy to replace the proceeds of their sale of US Treasuries?

We do not really know the answer. But if we are them, we will steer clear away from stocks, bonds and real estates. Other than investment expenditure, if we still need to find a place to park our surplus US dollars, the most logical place, in our opinion, will be to buy gold. This is what we will do if we are them. But we are not them.

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