Treasury QE Adds Fuel to Gold and Bitcoin Rally

Michael Howell from Capital Wars believes that the US Treasury's recent actions have sent a signal to investors, causing a rally in gold and Bitcoin prices. The increase in Treasury buybacks is small compared to the overall market size, but it has sparked a reaction among investors who are interpreting this as a sign of Washington's policy direction.

The analyst argues that the Fed wants to maintain liquidity at the short end while allowing longer-term yields to rise enough to do part of the tightening job. This creates a steeper yield curve and gives Treasury room to issue large amounts of bills and short-dated notes into strong bank demand.

Howell sees gold as a cleaner measure of monetary inflation, which is being driven by China's actions. He believes that gold has been doing it for thousands of years and should be held through the cycle because the fiscal and monetary forces behind it are structural.