Loading ...There is a growing consensus that the 35 year Bond bull is dead and we are v close to major TA confirmations….Yes the SM can keep going and may well….but yr buying at record Hi’s in a 9 syr old bull mkt, where prices have more than trebled…there is also see below, more and more talk about inflation….PM mining shares are not far off a a multi year low and are 1/3 rd of what they were in 2011.
If even a fraction of that Bond money $ 82.2 Trillion, say 5 % goes into PM shares = $ 4.11 Trillion…..it would buy the 5 largest Gold and Silver Miners with $ 2.7 left over…and that includes Anglo worth $ 1.3 on it’s own….ie without Anglo $ 3.96 Trillion is left…so it would buy the top 9 miners 30 times over !!!!!!!
Took this below from the FT article by Danielle DiMartino Booth
Global bond investors could be in for a nasty wake-up call. Amid all the euphoria surrounding Trumponomics, traditionally dovish US Federal Reserve officials have begun to sound like passionate hawks. Not only are multiple interest rate rises priced into the markets this year, officials have also crossed into previously sacrosanct territory, countenancing a shrinking of the Fed’s $4.5tn balance sheet.
Taking this next step to leave the era of unconventional monetary policy behind would effectively double down on the tightening in financial conditions. There is a growing risk, therefore, that the long era of calm in the global bond market is coming to an abrupt halt.
One of the first lessons of economics is that money is fungible — it can be repurposed at will. Global bond investors have adapted the idea of fungibility to quantitative easing. They are largely indifferent to which central bank is purchasing securities; the point is that some central bank balance sheet somewhere is growing. Add up the easing exertions and you get to $200bn or so every month, all of which is mutually interchangeable for the purpose of keeping animal spirits buoyant.
Investors’ steep assumptions do not stop there, though, for this is where that other basic tenet of economics — the law of supply and demand — comes into play. The lowest bond yields in 5,000 years also reflect the belief that central banks’ bond purchases permanently expunge supply from the market.
It is hard, therefore, to envision global bond investors retaining their composure as the assumption under which they have purchased dearly priced bonds in recent years vanishes. If the Fed has seen fit to allow global bond supply to begin expanding anew, what is to stop its central banking peers from following suit?
More disturbing yet is that inflation data now warrant tightening after years of price pressures being subdued. At 2.5 percent, the consumer price index in the US is the highest in five years. Even the “core,” which excludes food and energy prices, stands at 2.3 per cent over the past year.”