Long Term Bond Games Will Send Investors Into Gold

Historical Stock, Securities, Certificates, Fund, Bonds

Image Source: Pixabay

The mighty USA has $10,000,000,000 (trillion) of US dollar debt to sell this year.

It is only February 2024, and the 20-year and 30-year bonds are not being swamped with demand. 

Chart 1 - Ugly auction, this trend will continue until Yellen bends the knee.

Bonds

Chart 2 - 10 yr interest rates near multi-decade highs.
 

10 yr


It seems that with interest rates near 4.25% (10 yr) and the US dollar (DXY) near $105, this does not encourage foreign investors to buy long term US Treasuries. Therefore, either or both the interest rate needs to rise and/or the US dollar needs to fall to encourage investors to by 20 yr and 30 yr US Treasury auctions. 

Chart 3 - Rev Repo has fallen from $2.2 trillion to near zero.
 

Repo


The US Department of Treasury has been using the cash in the temporary reverse repo to transfer US debt to investors as TBills. This will be over by April 2024. Next, they can use the Treasury checking account (TGA) for another $800M. Then what? A much lower US dollar is an option.

Of course, a trending lower US dollar will fuel gold move to higher, this of course will improve the profits of gold and silver stocks. 

Chart 4 - XAU building higher lows.
 

XAU


Chart 5 - GDXJ base building.


GDXJ

Also, US corporations are soon to hit a re financing wall with much higher interest rates (up 100%). Higher interest expenses will result in fewer people employed. Rising unemployment in an election year will not be attractive, hence another good reason to lower interest rates and the US dollar.

Chart 6 - Corporate interest expense to explode soon.
 

Corp

 


More By This Author:

2024 Soft Landing Working It
Market Moving Macro In 2024
Stock Market Cycle Outlook For 2024
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.