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A quick update to my post last month regarding the continued purchase of US Treasuries by China.

- A couple days ago Warren Meyer (Coyote Blog) argued that China is the new Japan and that purchasing US Treasuries is a dumb decision.

- Two weeks ago the Financial Times wrote an interesting piece that pretty much touches the same issues I discuss, noting some of the same justifications I also made (i.e., liquidity).

- Three weeks ago Brad Setser put together some really good graphs illustrating China’s voracious appetite for US Treasuries.

I don’t have much to add at this point other than neither China nor anyone else is moving to the gold standard this year or next, if ever. So people should stop wasting their time talking about it. The Chinese probably won’t stop buying treasuries anytime soon either because they’re stuck in a terrible quandary. If they start to sell then the treasuries will lose value. But they can’t keep purchasing at the huge rate they have in the past because they don’t have the export-dollars coming in by the boat load anymore. What to do?

What the tea leaves are saying: I still am bullish on a stronger USD outperforming most other currencies over the next 6 months. Hyperinflation is not coming this year. And if you feel compelled to buy a metal, don’t buy gold, but rather get junk silver. Much less conspicuous and easier to divy up (it is an asset that Murphy recommends as well).