gold breaks out, page-68

Hi there Sid

"Cos a return to norm, is the 10yr moving from 1.5% back to ~3.5%. Thats a ~130% increase in cost of funding."

The last time I looked, the US Government funds itself mostly with fixed rate debt. Any money borrowed now for 10 years at 1.73%, stays at 1.73% for 10 years. Increased rates in the secondary market don't increase rates paid by the borrower.

If bond rates rise, I think that you will find that the cost of that debt will only rise as maturing debt is refinanced at higher rates that the rates on the maturing issues. It is likely that maturing issues from 10 to 30 years ago will have coupons higher that 3.5% and the refinancing may see the overall cost of government debt fall further, at least during the next three to five years.

I think you are concerned about a problem that doesn't exist.

As I have said before, anything said by Bill Gross should be taken with a grain of salt.

Cheers