Gold is climbing as bond yields rise and the dollar falls, over speculation that China is pulling bull bear forex system on buying US Treasuries and Japan signals it is winding down its quantitative easing program. The amount is the gross outstanding debt issued by the United States Department of the Treasury since 1790 and reported here.
But, it doesn’t include state and local debt. And, it doesn’t include the so-called unfunded liabilities of entitlement programs like Social Security and Medicare. Inflation, of course, diminishes the value of the currency and hikes gold prices, since the US dollar and gold normally move in opposite directions. Gold is seen as a hedge against inflation. Consumer prices in the United States increased 2. 1 percent year-on-year in December of 2017 Figures came below market expectations of 2. 2 percent amid a slowdown in gasoline and fuel prices.
Still, core inflation edged up to 1. 8 percent and the monthly rate increased to 0. 3 percent, the highest in eleven months. Last week was very interesting for the bond markets which are a key determinant of the US dollar and therefore gold prices.
40 following an announcement from the Chinese that they could either slow or halt their purchase of US Treasuries. 3 trillion worth of US debt, the most of any country. The Chinese buy Treasuries – effectively lending money to the US government – so that the US can keep buying Chinese goods and China can keep selling their products, earning enough dollars to convert into Chinese yuan to pay workers and suppliers. The People’s Bank of China buys US dollars from exporters, accumulating large forex reserves, and sells them yuan, to keep the dollar higher against the yuan. This gives China a competitive trade advantage. 416 billion, with the bulk of those earnings in US dollars, South China Morning Post pointed out in an editorial on Monday. T-bill holder losing faith in US debt, and by extension, the US economy.