Tuesday, November 30, 2010

Abigail Doolittle Says Something Has to Give

In her latest report, Doolittle, founder of Peak Theories Research, looks at the dollar, gold and Treasury yields. Her conclusions are:

- The phenomenon of “monetizing the debt” is nicely captured by the combined and long-term picture of the dollar and the 10-year Treasury yield. Specifically, it looks unsustainable.

- It looks unsustainable because it is seems unlikely that Treasurys can continue to strengthen on the back of an ever-weakening dollar and especially as some yields approach zero.

- Inflation is the likely break between these two as Treasury yields are forced higher while the strong Uptrend in gold also reinforces the likelihood of this definitional outcome of “monetizing the debt."
Her full report is here.

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