New Gold Rush Cometh With Global Bond Market On Edge Of “Cliff”

Friday, October 3, 2014
By Paul Martin

GoldCore
GoldSeek.com
Friday, 3 October 2014

The current U.S. bond market faces a “liquidity cliff” and looks like an asset “bubble” that could burst when interest rates start to rise, according to the senior U.S. securities regulator. This is something we have been warning of in recent months.

The consequences of the bursting of the bond bubble would be rising interest rates, which would likely impact property and stock markets and benefit safe haven gold bullion.

Securities and Exchange Commission (SEC) Republican member Daniel Gallagher said over a year ago that the $3.7 trillion municipal bond market may suffer”Armageddon” once interest rates climb.

The Fed has continued ultra loose monetary policies and debt monetisation for more than six years now. It has kept its benchmark interest rate near zero since December 2008. The Fed already employed three quantitative easing rounds buying up bonds to help stimulate the U.S. economy after the financial crisis.

The Fed maintains that the program will end this month and many investors expect the Fed to move to a tighter monetary policy. However, we believe that if the Fed increases rates, it would likely lead to a sharp recession and possibly a Depression. It would also likely lead to serious volatility in markets and the risk of a triple stock, bond and property crash.

There has been jitters in bond markets in recent days. PIMCO saw $448 million in fund outflows last Friday. Bill Gross’s departure from PIMCO to join Janus Capital Group is being blamed for some of the jitters but it may be that investors internationally are concerned about over valuation in bond markets and heading for the exits – before the stampede begins.

The Rest…HERE

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