The bond market has sold off again this morning, with the yield on the 10-year note reaching as high as 4.99%, before declining back down to 4.94% in the last few hours. All ahead of a speech by Jerome Powell to the Economic Club of New York at noon Eastern on Thursday, where one of the items market participants will be looking for is commentary on the surge in longer-term rates.
Of course, the treasury market is interlinked with the gold and silver trading. And in today’s show, Dave Kranzler of Investment Research Dynamics takes a look at how the reverse repo facility is affecting the yield curve, and how the drain of reverse repos is also going to be impacting the gold and silver prices.
He explains why the balance of reverse repos has been going lower in the current market environment, a trend that began when the treasury lifted the debt ceiling limit and started accelerating its borrowing levels again. And he talks about what happens when this balance runs out, how that affects the funding of the US treasury supply, and who’s going to have to step back in to fund all of it.
This is all a continuation of the underlying reasons that have led people into gold and silver over the past few decades, although these current dynamics lay out why the issue is coming to a head, and bringing the moment of truth for the metals all that much closer.
So to get a better understanding of why gold and silver investors are (or should be) keeping a close eye on the reverse repo facility, click to watch this video now!