Macro trends move slowly, but when they move they affect everything. As Janet Yellen prepares her refinancing and new issuance programs for the U.S. treasury needs, to cope with a huge budget deficit that Congress keeps growing, central banks around the world seem to be changing their appetite towards U.S. treasury bonds. After holding almost a third of all treasuries 10 years ago, central bankers are dumping treasuries to buy gold. In a fiat system, what makes a currency valuable is trust; and the chart below indicates that other countries are losing that trust over the U.S. dollar. Inflation but, above all, high levels of debt, and the expectation of higher debt in the U.S. are pushing other countries to look for alternatives to hold currency reserves.
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Chart source: Crescat Capital
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