There is no warning, then it happens, then comes the inferred denials and finally the truth. Investors are bailing out of U.S. Treasuries! In December of 2009, as was confirmed several weeks after the fact, China sold off a record amount of debt.
At the same time, 4th quarter 2009, Bill Gross’ Pacific Investment Management Company, (PIMCO) increased its holding of Non-US Developed Debt from 3% to 16%. And, as just reported, has increased those same holdings again from 16% to now 19%. How many others are fleeing U.S Bonds and to whence do they flee?
PIMCO, being a bond fund, has replaced domestic bonds with foreign bonds. China, in the last year or so, has secretly doubled its gold holdings. Then, amidst comments suggesting their gold purchases going forward would be limited, they started to buy gold mines. I guess if you buy the mine you don’t need to buy the gold.
Bottom line is, investors, (especially very large ones) are fleeing U.S. Debt related investments. One can only speculate the consequences if this trend continues and grows. When buyers go, you simply print more money to buy your own debt. Print enough and you have hyperinflation. Print too much and you have a good old fashioned gold rush.
Your coins dealer will scramble again to find Gold American Eagles. American Eagle Silver Coins, also recently reported to be in short supply, will be sought after like jewelry at a flee market. And, the question remains, who is going to be left behind?