Barring Massive QE a Bond Market Collapse Is on the Cards.

when you understand what's going on with the bond market and all the debt that's coming uh in the next 18 months I think is going to be 4 trillion and like Clive said there's no limit anymore to the debt ceiling June 1st 2023 Monaco 64 home of alternative economics and contrarian views we're going to look at the bond market bubble yes in my opinion that's burst

but I warned about it uh back in 2020 August of 2020 I warned about it back in 2019 and uh it's the most important Market out there because it sets the price of credit it sets interest rates it sets of of course uh the price of boring for everyone not just the government and uh yeah I I think uh things are precariously dangerous for the whole

system it's not just the banks they're in trouble and we're gonna look at that today before we go into the bond market though just wanted to uh talk a little bit about the US debt ceiling um the the house has voted voted it through I was gonna have Clive on today to talk about it and also the bond market but unfortunately for us unfortunate for him

he's has an appointment with his bullion dealer uh the bullion dealer has quite a bit of silver maple leaves for sale so he wants to go there and negotiate so that's good for Clive but he sent me something about the debt deal that ceiling deal and he told me to read it to you guys so here it is this is what Clive said by the way

the US that ceiling agreement which has been approved by the House of Representatives looks to me like a complete cave-in by the Republicans to the demands of the Democrats amazingly there is no debt ceiling for the next 18 months it's a free-for-all Yellen can fill her boots whilst the Republicans are trying to make it sound like it's a good deal because they got their way they

couldn't be further from the truth meanwhile the Democrats are struggling to hide their Glee at what is a very bad deal for America almost all of the Republicans proposed spending cuts have been thrown out of the window or severely paired back so there you go so this is also interesting uh because we're going to talk about bonds and what this means by Yellen filling her boots

it means that she's going to keep borrowing more she's the treasure gonna keep issuing more and more bonds and of course interest rates and yields are going to keep going higher in my opinion that is of course if uh if uh the fed and Mr Powell don't resume QE don't stop QT and start buying bonds that that's my opinion for those of you out there who

think uh bonds are gonna go back to zero the yields I think you're dreaming uh unless of course they do massive kiwi they do another 10 trillion but the flip side of that of course will be a currency that buys very little a worthless currency so he had the 10-year yield can be at three percent but uh it doesn't mean anything because I would say gold

and silver will be multiples of where they're now so back to the bond market bubble and it's all related to this and I remember I warned back in 2018 2019 2020 and there are many of the many people out there who who said that because of demographics that yields would never rise much more than two percent and I said that's rubbish because the reason yields have

gone down is because the central banks have been buying government bonds through their QE they the fed's balance sheet went from below a trillion in 2008 to almost 10 trillion back in uh 2020 so what that did as well to uh not just speculators but fund managers uh insurance companies pension fund managers they had to try to front run the Fed the bank of England the

ECB and they they bought these government bonds they were told by The Regulators that they needed to keep government bonds because they were safe they were like uh yes guilt edged right they were risk-free uh risk-free uh Investments but uh in 2020 in August I I made a video and I'm gonna put it up in the cards and I warned about the bond market bubble and

at the time I think there were nine trillion uh um in bonds 9 trillion dollars in dollars in bonds that were negative uh had a negative yield which is crazy of course but that happened because of central banks not because of demographics and even before that in 2019 uh the top the the top of the bubble was 17 trillion in negative yielding uh bonds not just

London I worked as a bond broker a Futures and options broker all in the bond markets and uh I'm very familiar with bones and and uh when I when I saw negative yields or you know rates staying at zero and stuff that was like a red flag to me because I started out in the late 80s and uh up until the early 2000s and even up

to 2007 and eight uh born normal bond yields were more like uh four or five uh to six seven you know not zero to two or even negative so I knew we we were in a massive bubble and the excuse about demographics and deflation uh Mal I think have been proven complete and utter uh fallacies I would say so what I'm trying to say here uh

is that um the bond market bubble is the most it's the biggest bubble of them all and I said that in 2020 and why is that well because all Financial assets are priced off bond yields and bonds of course are the price of credit and they're all different kinds of bonds they're government bonds corporate bonds uh their uh bonds for international organization uh municipal bonds mortgage

bonds but the government bonds are supposed to be the safest but unfortunately central banks made it the least safe they made it really risky and I think it's not just going to be banks that are going to be in trouble we saw already last year that the uh defined benefit private pensions in the UK they were collapsing I think there's going to be a lot more

collapses uh I think a lot of the uh company pensions uh public sector pensions they're all going to go down the drain and the only way to save it of course would be massive QE but that would destroy the currency so um I think things don't look good how long is this going to take I don't know back in 2020 yields are still really low and

I was warning it and I said I don't know how long they can keep it going well they kept it going for another 18 months so they could keep this going for another 18 months but I think it's gonna end in tears and uh I'm gonna give you an analogy of uh the bond market which will help explain why is so dangerous and why things are

getting really precarious for the bond markets and uh one of the reasons I'm talking about this is because Clive also sent me this picture here of the United Kingdom 50-year government bonds so this is the 50-year guilt so you can see it traded as as much as 210 and uh yes 50 years a long one it has a long-term uh it's it has a long duration

so it is riskier because then there's more volatility in it because a lot can happen in 50 years but be as it may and this Bond went to 210 back in 2019 2020 that was when there was massive QE so I explained in the video from 2020 because a lot of people back then were saying why would people buy bonds with a negative yield well because

when if the yield drop let's say from minus 0.1 to minus 0.2 if you had a 50-year Government Bond as you can see here the price would have gone from 150 to 200 so you you would have made money just like a holding a a tax stock so it became a bubble as I said but normally Bonds mature uh you know in 50 years let's say

this one and you get a hundred a hundred pounds back but as you can see this has dropped from 210 to 36 so can you imagine uh what this is doing to uh Pension funds government pensions uh public sector pensions uh hedge funds private equities loans I mean this is just a a total disaster and this is uh yeah so they they they were holding a

tax stock as safety and I say Tech stock uh of course it's not a tech stock but is acting like one and the reason why this is happening especially to the long-term bonds is something called duration and convexity and you can look this up it's very technical uh people in the bond market know about this but it's just the the sensitivity of the bond price to

uh interest rates and how long the duration of the bond is so the analogy is this uh let's say a one-year guilt uh if you are at a amusement a park you were in the roller coaster you're still down here and it's all flat it's boring that's the one-year guilt but the 50-year guild yield is uh very fun uh when yields are going down and negative

because you go all the way up but then when it turns you crash and I'm afraid this is uh yeah this roller coaster could break and it could wreak havoc on everything uh of course there's always the central bankers and the governments out there they might try to intervene by more QE more excuses and try to drag everything uh on and on and that of course

will only hurt the currency as I've said and that's why I keep going on about having uh hard assets and if you want to have liquid hard assets of course uh that are money it's gold and silver with Rising inflation bits of layoffs across most ers uncertain it's no wonder the central banks have been getting prepared by stockpiling gold at itm trading we have spent over

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the description below so there are still a lot of those out there who are wrong two three four years ago about the bond market they're coming out again and saying that yields are going to go back to zero or even negative but I I don't believe they will of course the central banks can print you know the FED can actually add 20 trillion to its balance

sheet and it might do that but then you'll see gold and silver at multiples of where we are because gold and silver reflect real value and the bond market will become even more of a bubble so with that let's quickly look at where the markets are this morning uh it's 8 34 a.m London time we've got spot gold at 1955. that's down about seven bucks High

has been 1967. we're right near the lows here uh silver is down uh 18 cents at 23.31 down three quarters of a percent and I think we should go past worrying about these prices uh we should be thankful that we can still Exchange relatively small amount of these uh rapidly depreciating Fiat currencies into a good amount of gold and silver actually to be honest for the

next 18 months it's crazy uh the stock market is virtually unchanged so I won't go through that the Futures the indices uh the pound is down 0.2 of a percent 124 18 uh the Euros down point two as well 106.70 dollars up a third versus the Yen it's almost at 140 uh dollars still fairly strong against the U1 at 7 13 to the other currencies uh

Aussie dollar is down 0.2 at 64.88 and the dollar is unchanged versus the Canadian dollar 135.82 and the Kiwi dollar is down uh half a percent at 59.93 to the Commodities uh WTI Crude is up a third of a percent at 68.35 uh Brent is up a third at 72.84 uh Platinum is up seven dollars is trading uh just above a thousand dollars so Platinum has

corrected as well a bit in the last few weeks and high grade copper is up uh one and two-thirds of a percent at 370. quickly uh quickly look at the uh guilt Market the two-year yield is up five basis points uh it's trading around 440. it has come off a little bit uh from the beginning of the week the 10 years at 423 and the 30

years at 456 that's up five the fifty year is up four basis points at 419. I expect these yields to go up even more unless of course we see QE from the central banks uh in the US the two two-year yield is at 446 that's up eight basis points and the 10-year is up five at 368. so there you go with that I'm gonna wish you

all a very good day take care bye