LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines

Wealth Accumulation Is Becoming Impossible
By: Keith Weiner, Monetary Metals

Gold Market Reaction: Tactics For Exhilaration
By: Stewart Thomson

Yes, Gold ďJust Sits ThereĒ and Thatís Quite a Feat
By: Clint Siegner

Precious Metals Update Video: Gold is stuck in a sideways market
By: Ira Epstein

Effect of QE4 on the Stockmarket and Gold...
By: Clive Maund

SWOT Analysis: The Dutch National Bank Is Bullish on Gold
By: Frank Holmes, US Funds

Quick Recap of the Fedís Foundering Follies and Our Descent into Economic Madness
By: David Haggith

The Gold Stock Correction and What Lay Ahead
By: Gary Tanashian, NFTRH

Precious Metals Update Video: Gold strong support below
By: Ira Epstein

Dollar Update (video)
By: Gary Savage


GoldSeek Web

Repo Rumpus Foreshadows A Short Squeeze on the Dollar

By: Rick Ackerman, Rick's Picks

 -- Published: Thursday, 19 September 2019 | Print  | Disqus 

The Fedís so-far $128 billion intervention in the repo market slipped off the Wall Street JournalĎs front page by evening, hardly a concern. Donít be surprised if, years from now, the squeeze on short-term borrowers that caused this flurry of excitement is cited as an early warning sign of the banking systemís coming collapse. On Tuesday, there simply werenít enough dollars around to keep short-term loans rolling.  This implies that the dollar short-squeeze I first wrote about in Barronís and the San Francisco Examiner more than two decades ago may have begun.

This time the Fed handled the problem without breaking a sweat. The next time, however, the cost might run into the trillions. Which is to say, more money than even the central bank can come up with on short notice. The banks wonít open the next day, nor will credit card transactions clear. There is no way that even a very prudent person can completely protect him or herself from the fallout, but it seems likely that those who hold Treasury paper and bullion as insurance will fare better than those who donít.

A Curious Thing

Regarding the run on repos, it is curious that a dollar shortage developed in one specific market at a time when dollars remain almost inexhaustibly available in so many others. Mortgage money is not tight, nor are 0% teaser loans for any credit card holder who is not in prison. Big companies have no trouble borrowing billions of dollars to buy back their shares. But borrowers in the repo market? They are potentially like short sellers of a stock that has suddenly become unavailable.  Which is to say, they will be dead ducks on that inevitable day when even a slight whiff of panic wafts through the Battery.

Although these paper-shufflers probably donít give much thought to the aggregate size of the borrowing they do, it amounts to something like a quadrillion dollars. That is the notional size of the derivatives market, and every dollar of it is tied in some way to all the other dollars. But why even worry about such things? To calm everyoneís nerves if thereís a run on bank reserves, the Fed can simply sacrifice Goldman Sachs or some other financial biggie the way it did Lehman on September 15 (!), 2008.

Bullion Will Move

Itís hard to imagine that gold will sit still when this drama unfolds. Usually a rising dollar weighs bullion down. But notice that the two have been ascending in tandem since June. Is this very unusual dynamic foreshadowing a crisis ahead?  Regardless, gold looks like bargain-priced insurance at current levels. It actually went down Wednesday as Wall Street smugly contemplated a rescue seemingly well done by the Federal Reserve. We kid ourselves to think this will be the last of it.

| Digg This Article
 -- Published: Thursday, 19 September 2019 | E-Mail  | Print  | Source:

comments powered by Disqus


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2019 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


The views contained here may not represent the views of, Gold Seek LLC, its affiliates or advertisers., Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, Gold Seek LLC, is strictly prohibited. In no event shall, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.