Posted on 05/17/2025 2:26:19 PM PDT by NoLibZone
The U.S. Federal Reserve just pulled off something stealthy — over four days last week, without fanfare, the Fed vacuumed up $43.6 billion in U.S. Treasurys. That’s $8.8 billion in long-dated 30-year bonds on May 8 alone, plus another $34.8 billion earlier in the week. Not exactly small change.
Quietly returning to the quantitative-easing trough isn’t standard Fed housekeeping — it’s like a bank robber returning to the scene because he forgot his car keys.
Let’s talk straight: This isn’t tightening. It’s stealth easing. It’s monetary policy on tiptoes. Some traders have begun to notice, and smart investors should too.
Commodity traders, in particular, have a nose for monetary sleight-of-hand. Gold GC00 +0.57% , the ultimate financial cynic’s metal, has risen sharply since early 2024. Gold doesn’t believe in politicians, central bankers or economists — even the Ivy League types who wave their hands and promise stability. It believes numbers.
But this isn’t just a U.S. game. China has jumped into the gold pit too, and brings a bigger shovel. China’s central bank just cranked open the vault doors by dramatically raising gold-import quotas, letting local banks swap U.S. dollars DX00 -0.10% directly for bullion.
(Excerpt) Read more at marketwatch.com ...
Bitcoin was trading at under $30,000 not long ago from $60,000+ level before that. That is too volatile for my taste. Gold prices are much more stable and have held up well against inflation.
I agree, Treasury bonds only guarantee return of face value of bond at maturity. But in the meanwhile those also guarantee interest paid every 6 months. So, if you buy a 20 year bond currently, you are guaranteed 5% interest on your initial purchase for 20 years. That computes total more than double number of dollars on initial purchase, during holding period of 20 years. Nobody knows how high inflation will be in future.
Yes that and my biggest regret is not buying gold at $35/oz when it became legal.
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You still have time….when Gold hits $5 K an ounce, or even $10K, you will think todays price ( 3,200 in US dollars) was a bargain.
Gold prices are much more stable and have held up well against inflation.
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That is the definition of Money, and holding it has no counter party risk ( devaluation, default, can’t go bankrupt, etc…).
IOW, the US treasuries aren’t selling...
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Yeah its is called "monetizing the debt"....something that past Fed chair Bernanke said we would never do. (His quote was 2012 or so).
It’s a crooked twist on how to “get your self” out of debt.
The real trick would be using the bond holdings to fulfill capitalization requirements. “See, I have assets, these 10 trillion IOUs to myself are my assets.”
You should buy some out of the money puts.
My investments are keeping up with inflation unless we get Biden Jr as next president. Besides bonds pay interest which pays for living expenses. If inflation goes higher, new bonds will pay higher interest.
“You still have time….when Gold hits $5 K an ounce, “
In 2014, you predicted gold would hit $5k in 2015.
Now, 10 years later, we are not half way there in today’s dollars.
Socrates stinks.
Just Wait until AI figure out how to turn Iron into gold.
The USA is leveraged far too far.
On paper what you are saying is true. That’s why auction buying agents are used.
What you are saying is true in form, but not in substance.
Last I read, the Fed is sitting on a huge unrealized loss on long term Treasury Bonds.
The loss was $1.06 Trillion at the end of 2024.
Toddsterpatriot said;
“ The PE ratio of the S&P 500 is much lower than in 1929 and much, much lower than in 2000.”
Why would Toddsterpatriot say that?
Jan 1, 1933 17.19
Jan 1, 1932 13.99
Jan 1, 1931 17.00
Jan 1, 1930 13.94
Jan 1, 1929 17.77
Jan 1, 1928 15.47
Jan 1, 1927 10.90
Jan 1, 2025 † 28.45
Jan 1, 2024 25.01
Jan 1, 2023 22.82
Jan 1, 2022 23.11
Jan 1, 2001 27.55
Jan 1, 2000 29.04
Jan 1, 1999 32.92
Jan 1, 1998 24.29
https://www.multpl.com/s-p-500-pe-ratio/table/by-year
Why I need to gamble? Already getting much more interest than I need for living expenses.
What is an auction buying agent?
That’s true.
https://www.wsj.com/market-data/stocks/peyields
From what I've seen, the PE ratio in 1929 was above 30 and over 40 during the Dotcom Bubble.
It’s where you use a third party to purchase something and then you purchase it from them.
As long as the Fed is paying a premium price on the secondary market, there is no need to purchase at the primary auction.
Bill Clinton used to use the Currency Stabilization Fund to sell gold futures in order to suppress the price of gold. He almost got burned until Tony Blair bailed him out by announcing a large sale of gold that put the price below the futures exercise price. Blair never sold the gold.
Then Bill Clinton changed the computation of the Cost of Living Index to allow substitutions. Inflation figures have been manipulated ever since.
All the Fed's purchases and sales are with Primary Dealers.
As long as the Fed is paying a premium price on the secondary market,
Why would they pay a premium?
Bill Clinton used to use the Currency Stabilization Fund to sell gold futures
Link?
Tony Blair bailed him out by announcing a large sale of gold that put the price below the futures exercise price
Futures don't have an exercise price.
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