Gold QE - FFTT Newsletter

“Gold QE”? Sounds like a crazy conspiracy theory, until it doesn’t. When US Treasury Secretary Scott Bessent said earlier this year that he would “monetize the asset side of the US balance sheet”. Most people assumed he meant selling T-Bills or creating a Sovereign Wealth Fund. But what if the US government is quietly rewriting a backdoor into the rules of modern finance?

Enter: Gold QE.

Long-duration US Treasuries have been wobbling under the weight of massive deficits, foreign selling, and investor apathy, Bessent and the Treasury face a problem, how to inject liquidity without triggering panic ?

They couldn’t use traditional QE because it would grab headlines and signal panic. Plus, the Fed wasn’t on board. Restarting QE now would scream “crisis,” scare bond investors, and push inflation expectations even higher. So instead, they reached for a backdoor option.

The theory is The U.S. Treasury is likely using gold derivatives to quietly borrow against its gold and inject cash into markets, mimicking QE without calling it QE. All without touching the Fed’s balance sheet.

If true, this is monetary policy not by the central bank, but by the Treasury itself. It bypasses Congress. It bypasses Powell. Its just a theory but theres some evidence to support it. Treasury has already bought back $169B in USTs since May 2024, putting a line under long-term yields.

I read about this in FFTT by Luke Gromen where he quoted Michael Mcnair and if this is true. This implies that QE can now be hidden from the public eye and that too quite conviniently. It turns gold and BTC into monetary anchors in a debt-soaked world. It allows the U.S. Treasury to monetize its gold without officially revaluing it. It completely removes headlines like “Fed starts QE again”, but achieves the same effect. And it’s deeply inflationary over time.

Earlier governments didn’t use Gold QE because the Fed was printing money and foreign buyers were funding U.S. debt. Today, with rising deficits and less support, Treasury may be turning to gold out of necessity. It’s policy innovation in the face of desperation,happening in plain sight.

This is just speculation for now. But if true, this might be the most important monetary shift since Nixon closed the gold window in 1971.

We’ll be watching. Very closely.