And while Gold remains in a secular bull market and profoundly has goodfundamentals behind it for several years to come, Treasury Bonds actuallydo not. They are even worse out of the two, because the Safety Crowdforgot to tell you that during recessions, tax revenues decline and thereforedeficits will go through the roof. I do not know how they missed that, but itis similar to the Goldilocks Crowd in 2007, which forgot to tell you thatFinancial Sector was actually not cheap.
So what happens to the United States budget during a recession, whichthe perma-deflation Safety Crowd claims will be good for Treasuries?
You see during negative economic growth, company earnings as well asprofits fall and jobs are cut. That means tax revenues decline. The Treasurywill therefore have to issue new bonds at a very rapid speed to finance thedeficit budget, which was already at over 4 trillion dollars last year(including hidden liabilities).
Source: Elliot Wave International