Michael Howell argues the market is being stabilized by active Federal Reserve and Treasury liquidity operations, but that support is also masking deeper fragility in bonds, FX, and the repo system. He remains constructive on gold and silver, sees China as the key medium-term driver of gold via liquidity, and frames U.S. dollar strength as a function of global dollar debt and the rise of stablecoins.
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In this interview at the Deutsche Goldmesse conference, host Kai Hoffman speaks with Michael Howell of Capital Wars about the immediate bond-market selloff, the volatility spike, and the recent correction in gold and silver. Howell argues that the U.S. Treasury and the Federal Reserve are actively intervening to keep bond-market volatility contained because the government must continuously refinance enormous debt loads. He says the Fed has injected roughly $600 billion of liquidity through reserve management purchases and regulatory changes, while the Treasury is using buybacks to smooth volatility and support collateral quality. …
Tactically, gold and silver look like buy-the-dip exposures only if bond volatility does not keep accelerating. The immediate risk is a forced unwind in leveraged Treasury trades, which could spill into cross-asset volatility before support measures reassert themselves.
Over the next few months, the base case is that markets stay driven by liquidity injections, reserve levels, and Chinese policy rather than by the Fed funds path alone. Gold should regain traction if China restarts easing and Treasury/Fed support keeps repo stress contained; failure of those supports would pressure the setup.
Structurally, Howell’s framework says debt growth and recurring monetization are now built into the system, making gold a durable beneficiary and the dollar a durable core funding currency. Stablecoins may extend dollar dominance rather than weaken it, while Europe remains vulnerable without a deeper fiscal union.
The Treasury and Fed are actively working to keep bond markets under control because the U.S. government must sell enormous amounts of debt.
He ties current volatility management to debt issuance and official intervention.
The Fed’s reserve management purchases and bank-regulation changes have added roughly $600 billion of liquidity since late October.
He gives a specific estimate and mechanism for liquidity injections.
Treasury buybacks are being used to cap bond volatility, especially by swapping illiquid off-the-run bonds for new issues.
He argues buybacks are a direct volatility-management tool.
What happened in the bond market yesterday, and why did yields spike so sharply?
The guest says bonds were already under pressure from rising inflation, but the bigger issue is that authorities are trying to control the bond market while issuing huge amounts of debt. He argues that this pressure is creating volatility that is spilling into forex and showing up in gold.
Is the recent drop in gold and silver a buying or selling opportunity?
He says it is a buying opportunity, especially if investors can get gold and silver at lower prices. He adds that China is also pulling back, which matters because China has been a major driver of gold prices in recent years.
What does the Fed's intervention in the bond and repo markets look like in practice?
He says the Fed has already stepped in at large size. In his view, repo spreads spiked and the Fed responded with around $600 billion of new liquidity through reserve management purchases and regulatory changes that freed up bank liquidity.
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