credit to Simon White (Bloomberg) and ZeroHedge

Treasury’s Controlled Burn and the Case for Real Assets

Buybacks are not the enemy. They help at the margin.

They take some pressure off clogged dealer balance sheets, improve off-the-run liquidity, and keep the optics of the Treasury market smoother than it would otherwise be.

But the scale is the problem. Buybacks are a drop in the bucket against massive net issuance. That imbalance is where the stress hides.

It Doesn’t Change the Supply Flood

• Net treasury issuance in 2025 is projected at ~$2.5 trillion.

• Buybacks at ~$150 billion sound big, but they only dent about 1 month’s worth of issuance.

• The scale is so mismatched that the supply pressure on bond markets remains overwhelming.

Implication: Rates and liquidity are still being dictated by the relentless tide of new debt, not by cosmetic smoothing operations.

Dealer Balance Sheets Still Get Swamped

• Dealers are the market’s shock absorbers, but they’re bound by capital constraints (Basel III, SLR, etc.).

• Removing $150B of old paper doesn’t free them enough space when trillions of new paper are being shoved in.

• That’s why the 10 year swap spread remains deeply negative: it’s cheaper for dealers to hedge synthetically than to warehouse Treasuries.

Implication: When the next volatility spike hits, dealers won’t have balance-sheet capacity to stabilize the market. Liquidity disappears faster.

The Structural Weak Link

The true weak link isn’t just the Treasury’s buyback program—it’s the shortage of pristine collateral paired with the shortage of offshore dollars (Eurodollars).

• In the postwar era, the U.S. was half of global GDP. The dollar was king by default.

• Today, the U.S. is a much smaller slice of the pie. Yet the dollar is still the backbone of global credit. That mismatch forces stress into the plumbing whenever growth or volatility accelerates.

• In every modern crisis, the chain snaps at the point of collateral or offshore dollar availability. Swap lines and Fed interventions have evolved, but the structurally underlying issues have worsened.

The Policy Trap

Treasury’s strategy of shortening the debt profile—more bills, fewer bonds—does suppress volatility in the short run.

But it’s the coiled-spring problem: the tighter and longer it gets wound up, the sharper the snap-back.

The curve steepens, forward rate paths multiply, and volatility is only pushed forward in time, not eliminated.

Our signals confirm this:

• Reverse repos drained to $21B (lowest since 2021): the overflow tank is gone.

• CHF demand holding near the 0.80 threshold: global capital reaching for safety.

• 3-yr SOFR–OIS spread at 28.7 bps: the “anxiety tax” for term funding remains.

• 10-yr swap spread remains deeply negative: there’s a lack of liquidity in actual Treasuries.

• Long-end yields rising in the U.S. and Japan simultaneously: this will put more and more pressure on global equities.

Why This Is Not Just About Crisis

Here’s where we need to be clear.

The case for gold and silver doesn’t rest on a financial crisis. In fact, the best case is the status quo:

• Governments everywhere are committed to money supply growth. Debt loads make debasement inevitable.

• Fiat promises are structurally weaker every year. The credibility of “paper wealth” is eroding, slowly but surely.

• Real assets don’t need panic—they just need time. Easing cycles, ongoing issuance, and incremental debasement are more than enough.

The explosive correction scenario—credit break, global deleveraging—is the tail risk. But it’s not required.

The Position of Real Assets

Real assets are becoming stronger relative to financial promises because:

1. Issuance dwarfs buybacks. The structural supply of paper is rising faster than liquidity provision.

2. Collateral shortages keep showing up. Each time, the Fed plugs holes, but the foundation is thinner.

3. Debasement is the long game. Central banks and governments need inflation to manage debt-to-GDP. That alone underwrites the case for gold and silver.

Bottom Line

Buybacks may smooth the optics, but they don’t fix the imbalance.

Every attempt to “manage” markets — buybacks, bill-heavy issuance, liquidity gimmicks — doesn’t add resilience, it adds fragility. 

The more tremors are suppressed, the more violent the quake.

Gold and silver have always been the true base layer of money.

Only in the last 54 years has the world run an experiment of unprecedented intricacy and scale: an entire global system built on debt.

But when debt outpaces GDP year after year, no amount of artificial control can prevent stress from compounding.

This is why gold and silver’s breakout aren’t technical — they’re symbolic.

It marks the return of real assets to their ancient role: the collateral of last resort.

Gold and silver don’t need a crash to continue their massive revaluations. They only need the continuation of what we already see:

• Debt racing ahead of growth

• Artificial management multiplying

• Fragility compounding

• Paper promises losing credibility

When that loop inevitably breaks, capital will rotate — not vanish — and it will seek the only foundation that has lasted across millennia.

The more the system artificially manages problems that ultimately require fundamental solutions, the weaker it becomes.

And the weaker it becomes, the stronger gold and silver get.

Why I Use HardAssets Alliance

HardAssets Alliance provides:

• 100% insurance of metals for market value

• Institutional-grade daily audits and security

• Best pricing — live bids from global wholesalers

• Fully allocated metal — in your name, your bars

• Delivery anytime or vault-secured across 5 global hubs

Luke Lovett
Cell: 704.497.7324
Undervalued Assets | Sovereign Signal
Email: [email protected]

Disclaimer:
This content is for educational purposes only—not financial, legal, tax, or investment advice. I’m not a licensed advisor, and nothing herein should be relied upon to make investment decisions. Markets change fast. While accuracy is the goal, no guarantees are made. Past performance ≠ future results. Some insights paraphrase third-party experts for commentary—without endorsement or affiliation. Always do your own research and consult a licensed professional before investing. I do not sell metals, process transactions, or hold funds. All orders go directly through licensed dealers.