“Holdings of U.S. Treasurys (sic) by foreign central banks has
fallen by a record amount over the past four weeks according to the latest
Federal Reserve data.
“The net $69 billion drop in Treasury holdings registered at the
Fed by foreign official institutions comes as benchmark yields ended 2011
near record low levels…
“The decline in foreign holdings of Treasurys (sic) in recent
weeks has not resulted in higher yields and lower prices because other
investors have sought the safety of US debt.”
“Foreign Central Banks Cut Treasury Holdings by Record”
The Financial Times, www.cnbc.com, 12/30/11
Foreign Central Bank holdings of U.S.
Treasuries have fallen to Record lows, but, notwithstanding this Massive
Central Bank selling, the (ostensible) demand for these U.S. Treasuries is so
great that their Prices are near record Highs.
A Conundrum!! The Solution to which
reveals considerable Profit Opportunities and Wealth Protection Essentials
described here, as well as the continuing disinformation published by
Consider Jeff Nielson’s Take on
“One should never underestimate Federal Reserve Chairman B.S.
Bernanke… This is the same man who told the world (day after day) that
the U.S. had a ‘Goldilocks economy’, where U.S. markets and house
prices would keep going up forever – at the very peak of the
made-in-Wall-Street U.S. housing bubble. This is the same man who then
promised the world (again and again) that the U.S. economy would experience a
‘soft landing’ after that gigantic bubble had already
burst. This is the same man who has announced more ‘exit
strategies’ than Harry Houdini – with not one of them ever
“Yet even the infamous ‘Helicopter Ben’ Bernanke has
outdone himself with his latest operations in the U.S. Treasuries market. For
those who missed the news, foreign central banks (the largest holders of U.S.
Treasuries) have been frantically dumping more Treasuries onto the market
over the past four weeks than at any other time in U.S. history.
“Those with even the tiniest understanding of supply/demand
fundamentals understand how markets operate in such situations. When there is
a sudden explosion of supply, the price buyers are willing to pay for that
good plummets until enough new buyers enter the market to soak-up all
of that excess supply.
“So how far have U.S. Treasuries prices fallen during this
‘panic’ in the U.S. Treasuries market? Zero. To
comprehend the absolute absurdity of this situation requires adding one more
piece of data to our scenario: U.S. Treasuries prices are currently at their
highest level in history – despite the fact that the United States has
never been less solvent.
“Readers need to realize how a bond market works. Prices and
yields (i.e. interest rates) move in a precisely opposite/inverse manner to
each other. As yield goes up, bond prices decline in a precisely proportional
manner (and vice versa). Given that yield is (supposedly) a function of risk,
with the U.S. economy being less solvent than at any other time in history,
this implies record-low prices for U.S. Treasuries – not
“Understand what is directly implied here. For maximum supply to
be dumped onto this market, while prices didn’t even budge slightly
from all-time highs does not merely imply ‘high demand’. It
necessarily implies infinite demand. Only where demand was literally
‘infinite’ would we see sufficient buyers instantly
materialize (at the highest prices in history)…
“…‘Infinite demand’ is not a plausible
explanation for what has transpired in the U.S. Treasuries market…
“As a matter of unequivocal arithmetic, if there was
infinite demand for U.S. Treasuries, yields for all maturities of U.S.
Treasuries would be compressed to 0%. The fact that (even at the highest
prices in history) these yields are not at 0% is absolute proof that there
has never been anything close to infinite demand for U.S. Treasuries.
“To make these impossible parameters even more ludicrous, in the
real world there are effectively zero buyers for U.S. dollar instruments
– and infinite sellers…
“China and Japan (two of the world’s top-5 economies) just
announced they are phasing-out U.S. dollars from their bilateral
trade. This is merely the latest in an endless series of bilateral and
multilateral deals which are incrementally (but relentlessly) removing the
U.S. dollar as the world’s ‘reserve currency’.
“To date, these deals have already reduced the demand for U.S.
dollars by $trillions per year…
“Even beyond the fact that no other nations want any U.S.
dollar instruments, we are confronted with the fact that there are no other
(visible) buyers able to soak-up all these unwanted U.S. dollar
instruments (including Treasuries)…
“We have a seemingly intractable paradox here. In the real world
there is essentially zero demand for U.S. Treasuries, while we have
the recent transactions in the Treasuries market directly implying infinite
“More specifically, we have no visible sources of capital
to even finance the purchase of all of those Treasuries. Thus the
phantom-buyer of all of these Treasuries must be an entity capable of
‘manufacturing capital’ – directly implying that this
phantom-buyer has a printing-press at his/her disposal.
“At the same time, we have B.S. Bernanke getting in front of
microphones day-after-day insisting that he has ended all of his
“…We have a farce so utterly absurd that it should not
fool anyone with the brain-power to be able to count their fingers and
toes.” (emphasis added)
“Maximum Fraud in U.S. Treasuries Market”
www.lemetropolecafe.com, Jeff Nielson, 12/29/11
Clearly, the most plausible inference is
that The Fed and Certain of its closely Allied Central and Key Mega-Banks (in
the U.S., certain Primary Dealers) are (primarily) Covertly buying up
these U.S. Treasury (and Other Sovereign) Bonds in Massive Amounts.
This is Massive Debt Monetization is
accomplished via largely Covert QE, a.k.a. Money Printing.
Further consider that the ECB is also
engaged in Massive Money Printing, via the recently announced LTRO, and
We expect this Massive, Monetary
Inflation ought to be (and indeed it is) reflected in Massive Price
Inflation, at least in certain Sectors.
And so it already has, but the Bogus
Official Figures do not reflect that. Consider the Real Numbers for the USA
from shadowstats.com** (Note 4 below) and note that U.S. C.P.I. already
verges on Hyperinflationary at 10.99% annualized.
Thus the U.S. C.P.I. number provides a
key clue to obtaining Treasure from Treasuries.
The ongoing Overt and Covert Money
Printing and Debt Monetization are prospectively Hyperinflationary but
especially for certain Sectors. Equally bad, this QE Monetization hurts
Investors, the Middle Class and most businesses, and helps only Certain Mega
Consider Bob Chapman:
“It is now obvious to alert observers that the ECR’s new
long-term refinancing program, LTRO, is an end-run quantitative easing
program…. Then there is Target 2, where the Bundesbank has secretly but
legally, lent the ECB $640 billion…. Just five years ago these target
claims were just 7% of Bundesbank assets. They now represent 64% of
assets…. What this means is that $1 trillion swap, which is really a
loan to the ECB by the Fed, will probably be exclusively used to bail out
European banks, 523 at last count.
"The elitists want fast GDP growth attained by the issuance of
more money and credit as exemplified over the past three years by the Federal
Reserve and others. This supposedly allows fast growth. Unfortunately, thus
far this has not been successful as yet, just sending GDP slightly upwards
for a short period of time. History shows us that 98% of the time this
approach has been unsuccessful. It is glaringly obvious that the only thing
central banks have tried to do is save themselves, banks and other financial
institutions and governments. Little or no effort has been made to rebuild
labor markets or to provide capital for expansion, research and market
“The Corbett Report | Interview 441 with Bob Chapman”
Apropos of the Mega Bankers saving
themselves, consider the analysis of ‘Tyler Durden’:
“Nine weeks after its bankruptcy, the general public still
hasn’t quite realized the implications of the MF Global scandal.
“…This is the first
tremor of the earthquake that’s coming to the global financial system….
“…There are several extremely serious aspects to the MF
Global case: Specifically, how their customers were shut out of their
brokerage accounts for over a week following the bankruptcy, which made it
impossible for those customers to sell out of their positions.
“…I want to discuss one narrow aspect of the MF Global
bankruptcy: How authorities (mis)handled the bankruptcy – either
willfully or out of incompetence—which allowed customer’s money
to be stolen so as to make JPMorgan whole.
“From this one issue, it seems clear to me that we can infer
what will happen when the next financial crisis hits in the near-term
“These 40,000 (MF Global) customers were not Big Money types
– they were farmers who had accounts to hedge their crops, individuals
owning gold … in short, ordinary investors. Ordinary people—and
they got screwed by the regulators,
for the sake of protecting JPMorgan and other big fry who had exposure to
“Now what does this mean?
“It means that
nobody’s money is safe. It means that regulators care more about
protecting so-called ‘Systemically Important Financial
Institutions’ than about protecting Ordinary Joe investors. It means
that, when crunch time comes, central banks and government regulators will allow
SIFI’s to get better, and let the Ordinary Joes get F _ _ _ _ _.
“So far, so evil—but here come the really troubling part:
It is an open secret that there are more paper-assets than there are actual
assets. The markets are essentially playing musical chairs—and praying
that the music never stops. Because if it ever does—that is, if there
is ever a panic, where everyone decides that they want their actual asset
instead of just a slip of paper—the system could crash.
“And unlike with fiat currency, where a central bank can print
all the liquidity it wants, you can’t print up gold bullion. You
can’t print up a silo of grain. You can’t print up a tankerful of
“When is there ever a run
on a financial system?
“When enough participants
no longer trust the system…. MF Global has moved us a lot closer to
this theoretical run on the system.
“As I write this, a lot of investors who I know
personally—who are sophisticated, wealthy, and not at all the paranoid
type—are quietly pulling their money out of all brokerage firms, all
banks, all equity firms. They are quietly trading
out of the paper assets and going into the actual, physical asset….
“Tuur Demeester, who runs Macrotrends, a Dutch-language
newsletter out of Bruges: ‘The banks are insolvent, the governments are
insolvent, and all that’s left is for the people to realize
what’s going on—and that will start a panic….
“…The integrity of the systems has been completely
shattered. If in the face of one
medium-sized brokerage firm going under, the regulators will openly allow
ordinary people to be ripped off for the sake of protecting the so-called
‘Systemically Important Financial Institutions’—in this
case JPMorgan—what will happen if there is a system-wide run?
“Will they protect citizens’ money?
“I think we know the
“After all, Demeester pointed out, all the banks and all the
governments are broke.
“This it’s only a matter of time before they come for your
“…Anyone will money
in the system will lose at least a big chunk of it, in one of two ways, or a
“We critics of the
current, corrupt state of affairs also sometimes confuse the SIFI’s
with the system itself, whenever we say, “The
whole system is corrupt!”
“But the system is not
corrupt—it’s the regulators and SIFI’s who are corrupt.
“…Once the general public catches on to what we already
know … oh boy.”
Post: A Run on the Global Banking System – How Close Are we?”
Durden,’ 12/27/11, zerohedge.com Guest Post via Gonzalo Lira
Investors are invited to consider
drawing the following conclusions from this ongoing Central Bank Money
Printing and Debt Monetization Derby.
It is wise to move as many Monetary
Assets as feasible into Tangible Assets in relatively inelastic
Demand, such as Agricultural commodities, and especially
that that move should be into the Monetary
Metals, Gold & Silver. To be sure, Gold and Silver are subject to ongoing
Cartel* Price Suppression Actions, but Deepcaster has developed a Strategy
for minimizing the Adverse Impact of their Price Suppression Actions and,
indeed, Profiting. See our “Profitability Playing Manipulation”
(7/21/11) in the ‘Articles by Deepcaster Cache’ at deepcaster.com
Since it is not feasible or reasonable
to entirely divorce oneself from The Paper Economy, one needs
to employ other techniques to maximize the chances of “Beating”
Real Inflation. For example, Anticipated Gain plus Yield (i.e. Total Return)
must prospectively exceed Real Inflation of e.g., 10.99% in the U.S.
(Deepcaster has developed a High-Yield Portfolio with this Goal.)
If any Reader thinks a
Financial/Economic Crisis is nowhere near imminent, just consider that on
January 4, 2012 Italian 10 year Bond Yields have moved back over the
Unsustainable 7% level, and Italy is Too Big to Fail
without bringing The System down.
The ECB’s (and Fed’s) Money
Printing and Debt Monetization are not working to “save”
the Eurozone Sovereigns, but just to buy more time to stave off the
The Key to finding Treasure in
Treasuries is to take advantage of the Hyperinflation resulting from
Mega-Banks increasing Money Printing and Treasury Debt Monetization. One can
find a Profitable Refuge in Essential Tangible Assets and Precious Monetary Metals.
December 16, 2011
**Note 1: Shadowstats.com calculates Key Statistics the way
they were calculated in the 1980s and 1990s before Official Data Manipulation
began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per
Annual U.S. Consumer Price Inflation reported August 18, 2011
(annualized July, 2011 Rate)
U.S. Unemployment reported September 2, 2011
U.S. GDP Annual Growth/Decline reported August 26, 2011
U.S. M3 reported August 14, 2011 (Month of July, Y.O.Y.)
No Official Report 2.44%
***Note 2: Using the above Guidelines allowed Deepcaster to
make buy and sell recommendations resulting in remarkable profits recently if
acquired and liquidated when we recommended*, approximately:
35% Profit on Double Long Gold ETN on August 23, 2011 after just 41
days (i.e. about 280% annualized!)
26% Profit on Double Long Gold ETN on August 17, 2011 after just 35
days (i.e. about 260% annualized!)
25% Profit on Gold Stock on August 8, 2011 after just 201 days (i.e.
about 45% annualized!)
38% Profit on Silver on July 18, 2011 after just 201 days (i.e. about
150% Profit on Gold Stock Calls on July 13, 2011 after just 56 days
(i.e. about 975% annualized!)
40% Profit on leveraged Short Treasuries ETF Puts on April 15, 2011
after just 3 days (i.e. about 4800% annualized!)
30% Profit on Silver on April 6, 2011 after just 98 days (i.e. about
To read our recent article -- “Essentials for Wealth Acquisition
Acceleration”, go to www.deepcaster.com and click on the
‘Articles by Deepcaster’ Cache.
Past Profitable Performance is no assurance of future Profitable Performance.
Preservation - Wealth Enhancement
and Geopolitical Intelligence