3/21/10 Fed Buying Of Debt To End On March 31, 2010??

Precious Metals Market Analysis, By Michael Pennington (Copyright 2010 Pennco Coins)

Don’t believe it! We all know the Fed has had to buy Treasuries because of the huge size of our debt. They have often stated that this will end at the end of this month. If they hold to this, there could be serious ramifications. I have written here repeatedly about the coming collapse in the bond market.

Over the last six months, we’ve seen gold outperform long-dated U.S. Treasuries by roughly 15% as the chart below indicates. I expect this trend to continue and accelerate over the next six months as the Fed stops supporting the U.S. Treasury market. Stay long gold, and stay long its hard-money cousin, silver.

I believe my prediction of a currency crisis will turn out to be right sooner than most anyone thinks possible. A global run on the dollar could happen at any moment. And the dollar isn’t just another major currency. It is the world’s reserve currency, the foundation of the entire system.

The $1.3 trillion in QE purchases of US Treasuries and US Agency Bonds is scheduled to come to an end. I don’t think so! Threats of a stern pullback are heard from the monetary easing that brought not only powerful QE but also near 0% free money to the Elite. The US Fed talks tough for an agency that is badly insolvent, as in busted broke. Sure, they can print money but the asset offsets the debit. Their balance sheet is loaded to the gills, like 50%, with wrecked mortgage bonds. If these bonds are marked down even 5% to 10%, the US Fed is insolvent. Reality would dictate a 30% to 40% writedown. Anyone who believes the QE is over is a fool, and probably thought the subprime mortgages were contained. The same people who made such errors are still in charge. Besides, the 2010 election season is months away, and that means they will continue to apply oil to the Printing Pre$$, revving up, and pouring out more tainted money.

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