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Economic Stimulus: The Fed is Still Buying, A Look Down the Rabbit Hole
Pinnacle Digest writes: The US is selling more debt to keep itself afloat as it has been for some time. How does demand remain strong? The Fed continues to stay on the bid creating false demand and record low interest rates for 10 and 30 year Treasury Notes. Gary Tanashian explains that his analysis suggests June could be a very volatile and pivotal month for gold.
He argues that gold generally trades in alignment with the 30 year/2 year yield spread. Thus suggesting a potential rise in the precious metal. The Fed's ability to continue 'twisting' its monetization of Treasury debt cannot last forever. Whether or not they decide to continue Operation Twist or 'go for the gold' as it were and opt for head on monetization is still yet to be known. The result will be the same.
Tanashian makes a statement regarding the Fed and other central bank policies as "officials are just rearranging deck chairs on the Titanic as far as inflation is concerned." On this point we have to agree.
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