This surprise will be wildly bullish for gold and silver prices.
Michael Oliver’s timely and powerful audio interview has just been released (LINK BELOW)! But first…
August 3 (King World News) – A small portion of the latest from the always brilliant Jesse Colombo: Something notable I want to point out, and which has been the talk of the financial world over the past few days, is the spike in U.S. government bond yields (and the corresponding sharp decline in bond prices) following the Fed meeting.
This is a sign that bond investors were not pleased with the Fed’s decision to hold rates steady instead of raising them by at least 25 basis points to prevent inflation from becoming entrenched. As a reminder, bonds are particularly sensitive to inflation, with long-duration bonds such as 20- and 30-year Treasuries being the most sensitive to changes in inflation expectations.
30-year Treasury bond yields reached 5.27% by the end of the week, the highest level since 2007. This surge is now threatening a breakout from the triangle pattern that has formed over the past four years, and if confirmed with a solid close, it points to even higher yields and further downside in bond prices in the years ahead.
I have been expecting a bear market in U.S. government bonds and much higher yields in the years ahead due to persistent inflation and the U.S. government’s extreme level of indebtedness. As I wrote in May, publicly held U.S. national debt surpassed 100% of GDP for the first time since World War II, so this recent spike in bond yields is not at all surprising to me.
While there has been a strong narrative lately that inflation and higher bond yields are bearish for precious metals—and I can see how they may create short-term volatility—history shows that the biggest bull markets in commodities and precious metals have occurred alongside the sharpest spikes in bond yields, such as during the inflationary 1970s (as show in the chart below). I view that period as a strong analog for the era we are heading into, which leads me to expect oil, precious metals, and bond yields to rise together while bond prices fall as inflation erodes their value.
KING WORLD NEWS NOTE: SURPRISE: Gold Skyrocketed Along With Interest Rates In The 1970s!
The reason I believe surging Treasury bond yields (and falling bond prices) will ultimately be bullish for precious metals is that the U.S. government will be forced to step in and support the bond market by any means necessary, including policies such as yield curve control and other measures that are effectively equivalent to creating new money. That will further erode the purchasing power of the dollar and drive precious metals and other commodities significantly higher…
Listen to the greatest Egon von Greyerz audio interview ever
by CLICKING HERE OR ON THE IMAGE BELOW.
Oil: The Charade Continues
Alasdair Macleod: It appears that under pressure from Arab states Trump has backed off from plans to attack Iran. Instead, he has made up (again!) a story about how Iran is ready to negotiate. Doubtless, those close to him have made a killing by shorting oil ahead of rumours/Truth-social posts etc.
As before, it seems very unlikely that Iran is interested in negotiating. They almost certainly seek revenge for US behaviour. It is in the Muslim nature.
Three things may have led to Trump backing down. The first is the Houthis taking out some 7 million bpd of Saudi oil and closing Bab el-Mandab. The second is stocks of US and NATO ordinance have run down to critical levels. And lastly, there are signs that G7 central banks are seriously alarmed at the economic consequences, and this has been quietly relayed to the White House. This could be what prompted UK’s Chancellor Healey to warn supermarkets about price-gauging because the BoE would have told him what the other G7 CBs fear.
But this won’t end until the US vacates the region. And that is likely to be a red line for both Trump and the Pentagon.
The US has suppressed the oil price by drawing down on here strategic reserves, but they are running dry with mid-August said to be the crisis point. And even if by some miracle Hormuz and the Red Sea open to tanker traffic by then, the shortage absent the strategic reserve will not be cured for months, plural.
Meanwhile, the shortage of diesel, heating oil, bunkers, and jet fuel are getting increasingly acute. This is reflected in the crack spread, normally about 20% now at 65%. That implies the oil price should be at least $120 without any stockpiling.
The Public Will Panic Into Gold & Miners
Michael Oliver, Founder of MSA Research: “The price of gold has to go to $8,000 or $9,000 just to match the gains we saw in the 1970s. There will be a point where the public will panic into gold and miners, and oil will go into the hundreds of dollars. There is…stop what you are doing immediately and listen to Michael Oliver discuss why gold and silver are poised to skyrocket while the mining stocks become the new tech stocks and head into a mania CLICK HERE OR ON THE IMAGE BELOW.
JUST RELEASED: GOLD & SILVER
To listen to Alasdair Macleod discuss gold and silver coiling to explode higher as all hell breaks loose in the US bond market CLICK HERE OR ON THE IMAGE BELOW.
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