Is It Really Just A Coincidence?
By: Greg Maurer, Gold Harvest Under A Silver Moon
December 30, 2009
I'm doing my best to ignore the markets this week. The noise that seems to persist is but a cacophony of impudent thieves boasting of triumph. Hardly...
In the never ending effort to obfuscate the Precious Metals Markets, the CRIMEX goons this week have toed the company line and engaged in some of their most nefarious and blatantly obvious criminal activity to date. Pause for a moment and peruse the graphic above...and consider this:
On Monday, Tuesday, and Wednesday of this week the United States Treasury Department has been engaged in yet another desperate series of auctions of US Treasury Bonds to further fund the irresponsible excesses of our floundering government. The total raised for the week a staggering $118 BILLION. This weeks auctions will be the final installment of 2009 Treasury issuance, which will bring this years' gross coupon issuance to $2.183 trillion -- a daunting figure surely to be matched in 2010.
In an effort to make these "tokens of debt" attractive to investors, it was deemed imperative by the Grand Masters of National Debt to make the US Dollar look strong, and it's arch enemy Gold look weak. Marching orders were sent to the cartel's bullion banks to "press Gold" to throw investors off the scent of safety in the hope of luring them into the Treasury's little Den of Debt instead.
Is it really just a coincidence that the price of Gold rolled over each of these three past days precisely at the open of trading on the CRIMEX as shown clearly on the graphic above? Not bloody likely! Let the graphic above sear into your mind. It is the clearest picture of a "crime in broad daylight" you may ever witness. There is absolutely no sound fundamental reason for Gold to have sold off at PRECISELY 8:20AM est every morning the past three days. NONE! If Gold is such a poor investment, why then does it not get clobbered in trading around the rest of the planet each night?
Gold holds the TRUTH about the destruction of your country by a small group of thieves determined to put each and every one of you in the poor house and destroy your inalienable right to life, liberty, and the pursuit of happiness guaranteed by the Constitution Of The United States Of America. The US Government will stop at nothing to keep this TRUTH from you.
The US Treasury cannot sell US Dollar denominated debt on its own merit. Therefore, the Treasury must use it's minions at the bullion banks to make Treasury Bonds "look better" than any alternative, in particular Gold.
US Treasury Bonds are a bad bet, and the World grows wiser by the day to this TRUTH. We are told again and again by the financial media that these weekly debt auctions are "successful". Why? Does one more successful bond auction buy the government another week or two of kicking the can down the road before the TRUTH overwhelms the Bond Market? Why are "successful" bond auctions always reported as if it were a "relief" that the Treasury succeeded in selling some more of the nation's future?
Are investors really buying all this debt? Or are we being led to believe investors are buying ALL this debt when in fact the Fed is buying it "indirectly"? Who is buying all the bad debt instead of buying Gold? Eric Sprott & David Franklin may know the answer to this question, and I doubt the Treasury Department will be happy to know that their little Ponzi Scheme has been exposed.
In their essay: Is it all just a Ponzi scheme? Eric Sprott & David Franklin go to extraordinary lengths to reveal just who is buying all this US Treasury debt, and it ain't you and me folks.
In the latest Treasury Bulletin published in December 2009, ownership data reveals that the United States increased the public debt by $1.885 trillion dollars in fiscal 2009. 1. So who bought all the new Treasury securities to finance the massive increase in expenditures? According to the same report, there were three distinct groups that bought more than they did in 2008. The first was "Foreign and International Buyers", who purchased $697.5 billion worth of Treasury securities in fiscal 2009 - representing about 23% more than their respective purchases in fiscal 2008. The second group was the Federal Reserve itself. According to its published balance sheet, it increased its treasury holdings by $286 billion in 2009, representing a 60% increase year-over-year.2 This increase appears to be a direct result of the Federal Reserve's Quantitative Easing program announced this past March. Most of the other identified buyers in the Treasury Bulletin were either net sellers or small buyers in 2009. While the Q4 data is not yet available, the Q1, Q2 and Q3 data suggests that the State and Local governments and US Savings Bonds groups will be net sellers of US Treasury securities in 2009, while pension funds, insurance companies and depository institutions only increased their purchases by a negligible amount.
So who was the third large buyer? Drum roll please,... it was "Other Investors". After purchasing $90 billion in 2008, this group has purchased $510.1 billion of freshly minted treasury securities so far in the first three quarters of fiscal 2009. If you annualize this rate of purchase, they are on pace to buy $680 billion of US treasuries this year - or more than seven times what they purchased in 2008. This is undoubtedly the group that made the US deficit possible this year. But who are they? The Treasury Bulletin identifies "Other Investors" as consisting of Individuals, Government-Sponsored Enterprises (GSE), Brokers and Dealers, Bank Personal Trusts and Estates, Corporate and Non- Corporate Businesses, Individuals and Other Investors. Hmmm. Do you think anyone in that group had almost $700 billion to invest in the US Treasury market in fiscal 2009? We didn't either. To dig further, we turned to the Federal Reserve Board of Governors Flow of Funds Data which provides a detailed breakdown of the owners of Treasury Securities to Q3 2009.3. Within this grouping, the GSE's were small buyers of a mere $5 billion this year; 4. Broker and Dealers were sellers of almost $80 billion; 5 Commercial Banking were buyers of approximately $80 billion; 6 Corporate and Non-corporate Businesses, grouped together, were buyers of $11.6 billion, for a grand net purchase of $16.6 billion. So who really picked up the tab? To our surprise, the only group to actually substantially increase their purchases in 2009 is defined in the Federal Reserve Flow of Funds Report as the "Household Sector". This category of buyers bought $15 billion worth of treasuries in 2008, but by Q3 2009 had purchased a whopping $528.7 billion worth. At the end of Q3 this Household Sector category now owns more treasuries than the Federal Reserve itself.
So to summarize, the majority buyers of Treasury securities in 2009 were:
1. Foreign and International buyers who purchased $697.5 billion.
2. The Federal Reserve who bought $286 billion.
3. The Household Sector who bought $528 billion to Q3 - which puts them on track
purchase $704 billion for fiscal 2009.
These three buying groups represent the lion's share of the $1.885 trillion of debt that was issued by the US in fiscal 2009.
We must admit that we were surprised to discover that "Households" had bought so many Treasuries in 2009. They bought 35 times more government debt than they did in 2008. Given the financial condition of the average household in 2009, this makes little sense to us.
This is a MUST READ essay. Please take the time to read it in its entirety, and share it with a fellow investor. The TRUTH must be heard.