FM3 (ASX) Ann: General Security Agreement

Originally posted by Corgi: ↑

He is just high lighting the the heavy shorting of the US yr note and the increase cost to borrow the 10 yr notes. The heavy shorting will see a lesser demand for the 10 yr note and rates will rise. The rise in rates will have a flow on effect upstream into various sectors such as their mortgage sector in which some mortgage rates are pegged to the rate of the 10yr note. The worry is that inflation is becoming a problem and you are seeing it across all commodities and consumer goods. The bigger worry is that the Fed is playing games and denying that there is any inflation problem based on how they measure CPI. Therefore, they will let inflation run abit higher, but the fear is that by the time they realize it's a bigger problem than they thought, it will be too late. That is why there is such strong interesting in shorting the 10yr note. When the FED finally decides to do anything about it, they'll be printing money to purchase the notes and control the steep rise in yields. The theory is that they are going to let it run so hot that they amount of money printing they'll need to do will be so enormous that it will kill the dollar. Inflation, weaker dollar, low interest rates are all good for gold.

In theory what has already happened to date should have already resulted in higher gold prices. The strong physical demand warrants higher prices. It is simply the dynamics of supply/demand. However, over the past 6 months, we've seen aggressive manipulation & shorting in the futures market which on face value has thrown the dynamics of this out the window and has made gold appear to be in a bear market.

Over the past 4 reporting period weeks the bullion banks have reduced their net short position by almost -60K contracts. They are now sitting at -135K net short contracts. The last time they were at these levels were in 2019. If the rising yields are bad for gold, then why are the bullion banks covering their shorts?...I believe what the bullion banks are doing is the best forward looking indicator and when the fed steps in and starts buying bonds the amount of money they'll need to print will be astronomical and we should we rates sub 1% but that won't fix their inflation issue.. With rates sub 1%, inflation running hot, former holders of the treasuries should be buying gold, not stocks, bitcoin, real estate or holding cash. But we shall see what unfolds, we're all living in unprecedented times, a story to tell your grand kids in the future.

I like the GSP channel. The guy used to be an auditor so his data and fact finding is spot on. I agree in theory with how everything that is happening leads to a weaker dollar and Inflation and when that happens the last thing anyone living in the US would want to do is to hold US dollars.

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What you said is very logical, and well presented, even for a guy who has zero knowledge of the financial sector like me. If your theory becomes true, our grandchildren would be rich beyond imagination. And even when the theory does not become true, the companies that we invested in are still highly profitable with a $1500 gold price. Let's sit tight and wait the whole story to unfold