Commodity Trade Mantra

Posts Tagged ‘Treasury Bonds’

Revealing the Real Rate of Inflation Would Crash the System

The grim reality is that real rate of inflation is 7+% per year, and this reality must be hidden behind bogus official calculations of inflation as this reality would collapse the entire status quo. Who’s being destroyed by 7+% real inflation? Everyone whose income has stagnated and everyone who depends on wages rather than assets to get by–in other words, the bottom 95%.

Will Fed Kill The Dollar To Save Markets - Or Sacrifice Markets To Save Dollar?

A strong dollar makes exported US military hardware too expensive for foreign purchases & a weak dollar can cause a lack of confidence in the dollar & can cause inflation because the US relies heavily on imports. If an interest rate hike causes the equity markets to crash, demand for US Treasuries will spike, thus furthering the Fed’s objectives of keeping demand high for US Treasury bonds.

Slow Economic Growth? Look to Gold, Treasuries as Safe Haven Investments

Gold, treasuries & other bonds tend to be so-called haven investments, where investors often park cash until equities recover. Gold futures have jumped as money managers flee equities. The rate on 10-year Treasury bonds has declined by almost a fourth as people rush to invest in the low-yield, low-risk investment. Dumping money into both is a trend that’s expected to continue.

Where Is Negative Interest Rate Policy Leading Us To?

Negative interest rate policy by the world’s central banks is getting out of control. The Riksbank has joined the European Central Bank, the Swiss National Bank and the Bank of Japan in this negative interest rate madness. They want inflation, but negative rates feed deflationary expectations. This causes consumers to hold onto cash in the expectation that goods will get even cheaper.

Negative Interest Rates Make Gold And Silver More Important Than Ever

You should soon expect to start paying interest for the “privilege” of lending your savings to a bank! Central planners will soon move from zero interest rate policy to the launch of negative interest rates. Look for investor demand to rise dramatically in the coming years in spite of the bias against gold and silver from Wall Street.

Will the Fed Have to Save Emerging Markets with QE4?

As emerging markets and nations attempting to defend their currency pegs to the USD sell U.S. Treasury bonds (which have been held as foreign exchange reserves), the yields on the Treasuries rise as a matter of supply and demand. As supply increases, sellers must offer higher yields to entice buyers. This dynamic undermines both the emerging markets and the U.S.

Is the Stock Market Now "Too Big to Fail"?

The stock market is now integral to the economy as a measure of sentiment & evidence that all is well with the economy. If the stock market is now too big to fail, the Federal Reserve will have to prop it up whatever the cost. Ultimately, this may require indirect purchases of stocks–an action that other central banks are already pursuing directly or indirectly via proxies.

From Crisis To Confiscation - Where Do I Store My Wealth?

Much of the world has gone on a massive spending spree & has, in effect, used a credit card to do so. The economic crisis, when it hits, will be sudden & will be devastating. Everyone in those jurisdictions will be negatively impacted, but those who have internationalised their wealth will fare best. When the dust settles, they will be the ones who are in place to recover & rebuild.

The Key to Understanding China's Devaluation Against the Dollar

By decoupling from the dollar now, China is sending a message that it may be prepared to let it fall later. This means that when the dollar starts to fall in earnest, China may not be there to catch it. This will also mean that the biggest foreign buyer of Treasury bonds will likely be unwilling to provide help when the U.S. needs China’s help the most.

Everyone Is Probably Wrong About The US Dollar

Could the current US dollar rally last a bit longer? Absolutely. However, it is unlikely to move substantially higher without a reasonable correction first. From a contrarian standpoint, with everybody on the long side of the trade, it may be time to take the opposing view. The good news is that a weaker dollar will play favorably for the beaten down commodity driven sectors.

Everything You Need To Know About Debt

Debt has become so ingrained in the American lifestyles, it’s borderline impossible to live without a credit card or a loan. What is debt, exactly & does it have a limit? How big is the debt & why do we have so much? While debt may seem like an abstract concept, when the federal debt is exceptionally high, the consequences are very real. Here are the answers.

What Is Really Driving Gold?

Electronic trading should not be underestimated. Its driving markets more than ever before & the gold market is no exception. That is not to say we like it; its simply the way things are nowadays. COMEX helped fuel the gold rally, but it is doubtful whether it was the ‘driver’. The clearest driver has been inflation expectation.

What the Federal Reserve and the Fear Trade Do for Gold

Investors buy gold out of fear of war or concern over changes in government policy. One of the strongest drivers of the Fear Trade in gold is real interest rates. Whenever a country has negative-to-low real rates of return, which means the inflationary rate (CPI) is greater than the current interest rate, gold tends to rise in that country’s currency.

The Simple Test to Determine if Gold Is at a Bottom

The industry can’t produce any more gold at these prices & that impacts the supply side. It certainly meets the test of being a contrarian investment. In our opinion, sentiment is pretty much rock bottom. It has gotten better with this rally, but in the bigger scheme of things, people still scoff at the idea of gold. That is one sign of a bottom.

What the "Price of Gold" Says About Central Bankers

Today, it seems hard to imagine a time when central bankers were more involved meddling in the markets. It seems hard to imagine a time when investors would be more likely to question their faith in these central bankers & that there has been a time in recent memory that investors would be more inclined to consider owning gold.

Yes, A Gold-Backed Renminbi Can Dethrone The US Dollar

The US appears to be doing everything in its power to hasten the relative decline of its own currency. Seems that the days of exorbitant privilege of issuing a currency that’s also the global reserve currency may be coming to an end – to be replaced, in time, with a bi-polar reserve currency world incorporating both the US dollar & the renminbi.

Gold Sentiment is Changing - Play it Safe

We could see some more downward pressure before the end of the year, but it’s difficult to make predictions because every market is somehow manipulated & managed. I wouldn’t be surprised to see gold at $1,400–1,500 in 2015 but if central banks step in & keep pushing equities higher, as they did this year, then $970/oz is more likely.

Have Central Banks Entered an Undeclared War?

Central banks play two games: one is pure public relations: marionettes on strings beat deflation with sticks and declare they’ll save financial parasites with “whatever it takes” monetary policies. Meanwhile, their actions may be mere shadows of the bold policies being trumpeted, or they may be extremes nobody dares make public.

Janus Yellen & the Great Transition from Risk-On to Risk-Off

Regardless of how Janus Yellen tries to sell the idea as the miraculous “fix” to the systemic bubble in claims the central banks have inflated, it will fail just as predictably as her plan to defuse the risk-on trade while maintaining the inflated value of the phantom assets the speculative frenzy has created out of nothing.

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