Failed Treasury Bond Intervention Signals First Inning Of US Debt Crisis Gold Now A Must Own

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A new historic cycle turn in the markets is starting.

Last week the US debt passed the $40 trillion mark and the US debt/GDP ratio, when you include both state and federal debt, is now over 130% - a level that historically leads to a debt crisis in nations.

In financial markets the way that plays out is a bear market in a nation’s bonds, stocks, and it’s currency all happening at the same time. The end of the bear is when the crisis happens.

A bear market in all three at once, though, is something that has not happened in the United States since the 1970’s.

It isn’t happening exactly yet, but warning signs are now right in front of you if you paid any attention to what happened last week in the markets.

Since the July Fed meeting, US Treasury bond yields have been slowly ticking up, with the 10 year bond yield approaching 5%. The day that it got near that level last year is the day that Trump backed off on his tariff war and people began to talk of a “TACO” trade.

This time - this past week - the US Treasury Secretary declared that he would buy up to $4 billion dollars in long-term bonds to force yields back down.

They fell for about an hour, he said he might buy more than $4 billion, and ended the week higher than they began.

It was a failed intervention - but it also suggests that he is in panic and that he will do anything necessary now to keep bond yields down.

That means more money printing.

The US dollar dropped as a result of all of this and the price of gold rallied hard.

Here is a chart of the US dollar index.