Chile Forum

Live rates at 2010.11.05 10:23:00 UTC
1.00 USD = 482.900 CLP

We're starting to dip down further. I wonder if it will get much below 480..

Then we got this rather under the radar counter move by Chile to cap the peso:

SANTIAGO (Dow Jones)--The Central Bank of Chile on Thursday increased the cap on private pension fund managers' investments abroad to 80% from the current 60%.

The move likely aims to increase the outflow of dollars from the local market in a bid to weaken the Chilean peso, which is trading near 30-month highs.

The international investment limit will increase gradually according to a schedule set by the central bank.

On Dec. 1, the limit will rise to 65%. It will then increase to 70% on March 1, 2011, to 75% on June 1 and to 80% on Sept. 1 of next year.

"The modification takes into consideration the government's general economic policy," the central bank said in a statement.

That is a big chunk of change, that will not catch the attention of World central banks or much of the media. It is intervention without looking like intervention in the peso.

I am not even sure what % of the GDP that is. It is got to be a major portion of it.

Ok, let me see if I can take this for a spin:

The Fed is printing up between 600 billion and 1 trillion of those green paper thingies. This is going to drive down the value of those green thingies. This means that everything imported is gonna cost more. It also means that demand for domestic made products will increase(and so will prices for them).

In other words, the US economy might produce more, more people might have jobs, the trade deficit might go down significantly, government revenues might increase while at the same time commodities will increase in prices?

Sounds like a good time to put your savings into gold and silver and ride the wave.

In a sense this story is related: http://www.reuters.com/article/idUSSGE6A70A720101108 Going forward we will hear gradually more talk about this. If the head of the World Bank is floating this, it's definitely on the fat-cat agenda. And that's bad for us. It will be offered up as a savior and Fate Accompli. Don't know when of course, probably shortly before the global financial scene becomes obviously unsustainable and Joe & Jane Sixpack see the little man behind the curtain. Eventually the lame-stream crowd, MSNBC, CBS, Faux, ABC, Bloomberg etc. will be yammering about it much more and it will be enacted at some point. But, of course it will not be a real gold standard it will be a central bankers and government friendly sham of a gold standard. Don't drink the Kool-Aid.

Remember, the IMF has one of the largest (barbaric, ain't good for nothing because you can't eat it) gold stashes in the world and on their books it is only priced at something like 42 to 45 dollars (can't remember the exact number) per ounce.

So by officially revaluing the price, they can change the world monetary system as we currently know it.

Even us idiotic gold bugs (hoarders some say) probably would not mind an official revaluation to cover the multi-trillions in faith-backed paper at say $20,000 USD per ounce.

Sweetie, are you married?

Even us idiotic gold bugs (hoarders some say) probably would not mind an official revaluation to cover the multi-trillions in faith-backed paper at say $20,000 USD per ounce.

Indeed you are optimistic...our (seemingly) angry ursine amigo.
g~j might project only a mere $5000 - $10,000 /oz. for our golden phoenix?
(...perhaps a mere $250 for our silver swan?)

Regardless...

Prognostication may not always be our forte.
BUT... let us say this >>>
Those who never jump on, or are shaken off, this ongoing Golden~Silver~Bull...
Will eventually commiserate their poor(er) bruised egos (and pockets) with their fellows.

admin wrote:I am not even sure what % of the GDP that is. It is got to be a major portion of it.

Seems like it. EMOL frequently cites the AFPs as a factor influencing the exchange rate.

James.

Well, I think that will at least in the short-term keep the exchange rate stable. I just really do not expect it to stay there going forward in to 2011. If by say Feb on we do not see the peso start moving towards the over 500 + like it normally does every year, then we are set for serious and perhaps more permanent move the other direction.

Fed bond buying is going to lead to an even bigger overall rally in commodities, including Gold and Copper. Even more money will move in to the emerging markets. Chile is kind of best of all possible worlds in this environment. Emerging market with the safety and security of a developed market, plus lots and lots of commodities, with a small population to deal with. Inflation in the States is already setting in, it just is not appearing in the Government numbers, houses, or employment. By the time everyone screams the inflation sky is falling, it will be too late.

For my part, I am out, out, out of dollars for a long time to come. I am not keeping anything but short-term change in the States. Many better places to park it, and if there is a big currency mess brewing, I would rather get caught with the currency that feeds me day - to - day in my pocket.

Here were today's Chilean predictions, for what they're worth:

http://www.economiaynegocios.cl/noticia ... p?id=78789

Yeah, I always thought this recession would put Chile on the map economically (well, it was already doing pretty well, but maybe now it has a chance to pull ahead).

James.