The U.S. Federal Reserve just canceled something invisible - in four days last week, without big fanfare, the U.S. fiscal depot vacuumed $43.6 billion. On May 8 alone, it was $8.8 billion in long-term 30-year bonds, plus another $34.8 billion earlier this week. Not a small change.
Quietly returning to the quantitative slot isn't the standard Fed steward - like a bank robber returning to the scene because he forgot the car keys.
Let's be straightforward: This is not tightening. This is loose. This is the monetary policy of tips. Some traders have begun to notice that smart investors should, too.
Especially commodity traders, the nose of currency planning. The ultimate financial cynical metal gold GC00 has been rising dramatically since the beginning of 2024. Gold doesn't trust politicians, central banks or economists, or even Ivy League types that wave their hands and promise stability. It believes in numbers.
But it's not just an American game. China also jumped into the gold pit, bringing a bigger shovel. China's central bank has just opened the vault door by significantly increasing the golden symbol quota, allowing local banks to directly exchange the DX00 DX00 for gold bars.
That was China quietly telling Uncle Sam that people holding all the U.S. Treasury began to feel less like a cautious investment, and more like a roulette on a house on fire.
Think about it. Even if China turns into gold, 10% of the $784 billion treasury storage held by February will tremble through global markets.
China has not hoarded gold because it matches curtains - it is preparing for a currency earthquake. Central banks around the world are doing the same. The United States only imported one gold. The country is preparing for the next earthquake shift in global monetary power.
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Gold and Bitcoin BTCUSD are also responding - Bitcoin, because crypto investors do not trust central planners; gold, because central planners do not trust each other. Bitcoin is a considerable back-level asset that investors pretend not to access. Not only is Bitcoin rising, not only because of the central banks and the neat Fiat currency behemoth program they have been running for years, but also because Bitcoin experienced its latest halving activity a year ago, pushing it toward typical optimism for four years.
And more. The Trump administration’s previous cautious attitude towards cryptocurrencies has undergone a big shift, building a strategic reserve of Bitcoin in the United States, a move signaling the confidence of an agency that Bitcoin is not only a speculative fashion, but also an asset worthy of strategic importance.
In addition, institutional and retail funds are flowing to Bitcoin ETFs, which strengthens the legitimacy of Bitcoin as a mainstream financial asset.
If the Fed quietly presses the QE button, Bitcoin could be an investment in midnight convenience store burritos – volatile but satisfying.
Opportunities are abundant for investors willing to bet on the Fed’s recent moves, especially in places where tangible commodities are buried under their feet, such as Latin America and Brazil’s commodity-rich economies, an economic powerhouse that enjoys the bull running of commodity fuels.
For example, so far this year, iShares MSCI Brazilian EWZ and the broader iShares Latin America 40 ETF ILF have respectively earned about 24%. These are unlucky speculations; they are using strategic positions to benefit from the Fed's weaknesses in the dollar and rising commodity prices.
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Brazilian merchandise is like a seaside property, and when hurricane brewing is brewed on the sea, it is an ideal location if you are on solid ground and ready for storm season.
The Fed's invisible quantitative easing is the opening ceremony in a larger financial drama. Gold is climbing, Bitcoin gains legitimacy, and resource-rich economies like Brazil are expected to benefit. Central bankers usually offer fewer quotes than professional poker players, but now they are twitching. The quiet moves of central banks are usually before loud market changes.
Gold, Bitcoin and Latin American markets have already received impressive returns, but the Fed's cautious pivot can return to quantitative easing, suggesting that these gains may accelerate.
While quantitative easing will often support U.S. stocks, the move’s stealth — a decline in trust in rising Fiat currency and geopolitical tensions, using gold, Bitcoin and Latin America as primary shelters, and profit opportunities amid the storm.
Investors are now focusing on the remaining winds – before catching the storm – is the best opportunity to capture these super-large returns. So please be aware.
Garcia holds positions in gold, silver and Bitcoin. .
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