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<p>[QUOTE="yakpoo, post: 7149330, member: 18157"]The way I understand it, over the past year, banks were allowed to use U.S. Treasuries to fulfill their reserve requirements. By removing this temporary measure, banks will have to sell Treasuries to raise the necessary cash to meet their reserve requirements. This should put upward pressure on real interest rates since the Fed has already announced they won't increase their Treasury balance sheet.</p><p><br /></p><p>Investments compete with each other for capital. As real interest rates increase, capital will likely flow out of PMs and into Treasuries. Once reserve equilibrium is achieved, capital flows should stabilize. It should be interesting to watch PM prices over the next few months. <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie99" alt=":watching:" unselectable="on" unselectable="on" /> </p><p><br /></p><p>I'm expecting a dip in PM prices (buying opportunity) over the next few months.[/QUOTE]</p><p><br /></p>
[QUOTE="yakpoo, post: 7149330, member: 18157"]The way I understand it, over the past year, banks were allowed to use U.S. Treasuries to fulfill their reserve requirements. By removing this temporary measure, banks will have to sell Treasuries to raise the necessary cash to meet their reserve requirements. This should put upward pressure on real interest rates since the Fed has already announced they won't increase their Treasury balance sheet. Investments compete with each other for capital. As real interest rates increase, capital will likely flow out of PMs and into Treasuries. Once reserve equilibrium is achieved, capital flows should stabilize. It should be interesting to watch PM prices over the next few months. :watching: I'm expecting a dip in PM prices (buying opportunity) over the next few months.[/QUOTE]
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