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- Jan 5, 2010
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Shouldn't gold price increase with decreasing long term US treasury yields, since the lower the interest rate(/yield), the cheaper it is to borrow money to invest in gold?
And how do small central bank balance sheets "provides a backstop for the precious metal" in the context of "ballooning central bank balance sheets no longer provides a backstop for the precious metal"?
I would think that the larger the CTL bank balance sheets, the higher the price of gold since this implies that the government being quite bankrupt and will in future print even more money or create more inflation to raise GDP to make it easier to pay interest on its exponentially increasing debt burden (aka CTL bank balance sheets).
Anybody with any idea what this guy is talking about? Counter intuitive knowledge? Or doe he work for USA government and putting a super big spin on things?
Anyone please.
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https://www.dailyfx.com/forex/funda...Treasury-Yields-Ahead-of-Fed-Meeting.html/amp
In turn, key market themes may continue to sway financial markets as the Fed’s balance sheet climbs to a fresh record high of $7.415 trillion in the week of January 20 from $7.334 trillion the week prior, and it remains to be seen if the price of gold will continue to track US Treasury yields as the low interest rate environment along with the ballooning central bank balance sheets no longer provides a backstop for the precious metal.
With that said, the FOMC interest rate decision may do little to prop up the price of gold as long as the central bank stays on track to increase its “holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month,” and bullion may continue to give back the rebound from the monthly low ($1803) if the recent weakness in longer-dated US yields persists.
--- Written by David Song, Currency Strategist
And how do small central bank balance sheets "provides a backstop for the precious metal" in the context of "ballooning central bank balance sheets no longer provides a backstop for the precious metal"?
I would think that the larger the CTL bank balance sheets, the higher the price of gold since this implies that the government being quite bankrupt and will in future print even more money or create more inflation to raise GDP to make it easier to pay interest on its exponentially increasing debt burden (aka CTL bank balance sheets).
Anybody with any idea what this guy is talking about? Counter intuitive knowledge? Or doe he work for USA government and putting a super big spin on things?
Anyone please.
======================
https://www.dailyfx.com/forex/funda...Treasury-Yields-Ahead-of-Fed-Meeting.html/amp
In turn, key market themes may continue to sway financial markets as the Fed’s balance sheet climbs to a fresh record high of $7.415 trillion in the week of January 20 from $7.334 trillion the week prior, and it remains to be seen if the price of gold will continue to track US Treasury yields as the low interest rate environment along with the ballooning central bank balance sheets no longer provides a backstop for the precious metal.
With that said, the FOMC interest rate decision may do little to prop up the price of gold as long as the central bank stays on track to increase its “holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month,” and bullion may continue to give back the rebound from the monthly low ($1803) if the recent weakness in longer-dated US yields persists.
--- Written by David Song, Currency Strategist
