Treasury's Bond Buying Spree Triggers Gold Price Surge

The US Treasury is taking an unusual step to boost long-term bond yields by buying its own bonds. The Treasury is purchasing long-term Treasuries, specifically 10-30 year bonds, with proceeds from short-term Treasury sales. This tactic effectively constitutes a form of quantitative easing (QE), aimed at lowering long-term yields.

The Federal Reserve indirectly supports this move by buying $40 billion/month of short-term Treasuries, thereby boosting liquidity without labeling it official QE. This has significant implications for the bond market and the US dollar's value.

As a result of waning global demand for US Treasuries and central banks diversifying into gold, the price of gold is expected to rise. Analyst Evgeniy Shkolenko predicts that gold will reach $5,500-$6,000 by early next year and potentially $10,000+ in 3-5 years.

Shkolenko's bullish long-term thesis for gold prices makes it a top asset to own, especially considering the uncertainty surrounding the US dollar's value. The Treasury's move highlights the need for investors to reassess their portfolios and consider diversifying into assets like gold.