Central Banks Are Buying Gold At The Fastest Pace In Six Years

Earlier this month the World Gold Council published its quarterly report– and it shows that central banks and foreign governments from around the world are buying up gold at their fastest pace in six years.

This is pretty big news, and it says a LOT about the future of the dollar.

Remember, central banks and foreign governments hold literally TRILLIONS of dollars of reserves… and traditionally they do this by buying US government debt.

It sounds strange, but to big institutions, banks, etc., US government debt is equivalent to cash. They use it as a form of money.

More importantly, they hold US dollars because that’s the global standard: the US dollar has been the world’s primary international reserve currency for seventy five years.

So US debt is extremely liquid. In fact, the $22 trillion US debt market is the biggest and most liquid market in the world.

But foreign governments have started breaking with the tradition of buying treasuries.

As the World Gold Council’s report showed us, foreign governments and central banks have been buying a LOT more gold than in previous years.

Net gold purchases in Q1/2019 among foreign governments and central banks was nearly 70% greater than Q1/2018… and the highest rate of first quarter purchases in six years.

The Chinese in particular, have been stockpiling gold faster than ever, while at the same time, Chinese ownership of US treasuries as a percentage of total holdings has been gradually declining over the past years.

And it’s not just China.

Russia, Turkey, Qatar, and even Colombia – a long-time ally of the US – have been diversifying and buying a lot more gold.

There are a few obvious reasons behind that.

The debt of the US federal government recently reached $22 trillion. And it isn’t getting any better– they add at least $1 trillion to the debt each year.

And the Congressional Budget Office forecasts that the Uncle Sam will NEVER again see an annual budget deficit of less than $1 trillion starting in 2021.

That has serious impact on the ability of the US government to repay its obligations to foreign creditors.

And if the Bolsheviks come to power next year and offer free goodies (paid for with more debt) to anyone with a pulse, the debt burden will explode.

Anyone who thinks owning 10-year US treasuries – or even worse, 30-year government bonds – is risk-free, is completely insane.

The dollar’s problems aren’t limited to the US government’s pitiful finances either.

Even the Federal Reserve– the central bank of the United States– is close to insolvency, according to its own financial statements.

And the Fed’s coffers are routinely plundered by Congress in order to fund pet projects in Washington.

It’s so ridiculous that, in late 2015, Congress passed a law to steal $53.3 billion from the Federal reserve, putting the central bank on the brink of insolvency.

https://www.zerohedge.com/news/2019-05-15/central-banks-are-buying-gold-fastest-pace-six-years

TSA to deploy hundreds to southern border

Amid the start of the summer travel season, the Trump administration reportedly plans to reassign hundreds of Transportation Security Administration employees to help assist with migrant inflows.

The TSA workers, which include air marshals, will be temporarily reassigned to help tackle the “immediate need” at the southern border, CNN reports. The group will include as many as 175 law enforcement officials and up to 400 security operations officials.

In an email to agency regional management, TSA official Gary Renfrow wrote that the 400 people from security operations will be deployed in waves: “There is now immediate need for more help from TSA at the SW border.”

“We also understand that we are accepting some risk as we enter a very busy summer,” Renfrow reportedly said. Some parts of TSA are being asked to contribute around 10% of its workforce.

Citing the email, CNN said the deployments will last between 45 and 60 days but could last longer. Illegal immigration is surging, with nearly 100,000 people taken into custody by officials in April — the highest number detained in one month since April 2007.

https://www.washingtonexaminer.com/news/tsa-to-deploy-hundreds-to-southern-border

Nancy Pelosi meeting with US trade chief amid China tariff war

Democrat Nancy Pelosi — the Speaker of the House of Representatives — is meeting with U.S. Trade Representative Robert Lighthizer today — one day after President Trump received bipartisan backlash amid an escalating trade war with China that could hurt U.S. farmers in the Midwest.

The topic of the scheduled meeting is Trump’s new trade agreement with Canada and Mexico (the United States-Mexico-Canada Agreement, or USMCA). However, the tariff battle between China and the United States will undoubtedly be discussed at Pelosi’s meeting with Lighthizer.

“I wish him success in the negotiation [with China],” Pelosi told reporters on Monday. “But we have to use our leverage without antagonizing those who are on our side on this.”

Pelosi will likely postpone USMCA vote to undermine Trump

The USMCA — a successor to the North American Free Trade Agreement — needs to be ratified by Congress, which means it must be approved by the Pelosi-led House of Representatives.

The Democrats want to modify the USMCA to make it less pro-America, but U.S. Trade Representative Robert Lighthizer says the Trump administration will not re-open negotiations.

Pelosi could obstruct President Trump by delaying the vote to ratify the USMCA past its summer deadline until the 2020 presidential elections — when it will put Trump on the defense.

https://www.bizpacreview.com/2019/05/15/nancy-pelosi-meeting-with-us-trade-chief-amid-china-tariff-war-754663

China’s nuclear option of dumping US bonds would cause absolute chaos in global markets – expert

The ongoing tit-for-tat tariff exchange between China and the US could push Beijing to strike back with the so-called ‘nuclear option’ – dumping its vast holdings of US Treasury bonds.

While the move would be partly self-defeating for China, it would also have devastating consequences for global financial markets, Sourabh Gupta, a senior fellow at the Institute for China-America Studies in Washington told RT.

“In that case, there would be absolute chaos in global currency markets, and thereafter in global equity markets,” he said, adding that with regards to interest rates “after significant initial volatility, the effects would be somewhat muted.” The concern though is with financial market sentiment, not specifically interest rates, Gupta said.

China currently owns $1.13 trillion in US Treasuries. That’s a fraction of the total $22 trillion in US debt outstanding but 17.7 percent of the various securities held by foreign governments, according to data from the Treasury and the Securities Industry and Financial Markets Association. Beijing has been pulling back from its role in the US bond market, having cut holdings nearly four percent over the past 12 months, but it still takes the top spot among America’s foreign creditors.

Gupta said that even if the trade conflict worsens abysmally, he doesn’t think Beijing will completely stop buying US debt. “There are better avenues for retaliation, such as government-juiced consumer boycotts of US goods. Until China fully internationalizes and hardens its currency, it simply cannot walk away from US debt markets… and doing so would be self-damaging,” he said.

He explained that US Treasury markets are deep and liquid, and China’s exit, at a time when interest rates are already near decades-long lows, will only cause a modest spike in rates. “As the primary reserve currency issuer in the international monetary system, the US government will be able to finance its medium-term borrowing needs without significantly hurting the domestic economy. But it would certainly not be painless.”

https://www.rt.com/business/459400-china-us-war-treasuries/

>>6504427

Checkmate