Wednesday, July 13, 2011

MTY Reversion to 3% Minimum Coupon Today

The P.M. London Gold fix for July 13, 2011 was $1579. Current Statistics | LBMA The maximum level for the "principal protected" note, MTY, was $1576.8 for its current annual period.  The fix today was sufficient to cause MTY to revert to its 3% annual coupon.  The closing period for the current coupon period will be 7/27/2011, so it did come down to the wire on another big payday for this security. Stocks & Politics: MTY 

The testimony by Bernanke today, raising the possibility of another round of quantitative easing, and similar remarks contained in the minutes of the last FED meeting released yesterday, provided enough oomph for gold to accelerate over the maximum permissible for the current annual coupon period. Gold is reacting to the persistent debasement of the USD through money printing, and to the overall lack of confidence in governments. Gold is viewed as an alternative currency whose value can not be destroyed by irresponsible governments and their citizens.  

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