Stealth QE, Fed Secretly Bought $43.6B in Bonds, Why are they Hiding it?
Stealth QE, Fed Secretly Bought $43.6B in Bonds, Why are they Hiding it?
Daniela Cambone: 5-29-2025
The Federal Reserve’s recent actions are sparking debate about whether they’re quietly resurrecting quantitative easing (QE).
Michael Gentile, founding partner at Bastion Asset Management, argues emphatically that they are. In a recent interview with Daniela Cambone on ITM Trading, Gentile pointed to the Fed’s purchase of $43 billion in U.S. bonds as a sign of “how precarious the situation” has become for the U.S. economy.
While the Fed may be avoiding the “QE” label, Gentile believes this intervention is driven by concerning underlying factors. He highlights the rising U.S. deficits and a dwindling pool of natural buyers for U.S. debt. This leaves the Fed increasingly pressured to step in and prop up the market for U.S. Treasuries.
But the ramifications extend far beyond U.S. borders. According to Gentile, this situation is triggering a significant shift in global reserve strategy. Central banks around the world are reportedly diversifying their holdings, reducing their reliance on the U.S. dollar and actively accumulating physical gold.
“We’re seeing a multi-year, multi-decade rotation out of U.S. dollar assets into gold,” Gentile stated. This isn’t just a short-term reaction to market volatility; it represents a fundamental re-evaluation of global economic security.
The concerns stem from the potential for a self-perpetuating cycle. Increased government spending leads to larger deficits, requiring more borrowing. If the market isn’t willing to absorb this debt at acceptable interest rates, the Fed might be forced to intervene, artificially suppressing rates and potentially fueling inflation.
This intervention further devalues the U.S. dollar, making it less attractive as a reserve currency. Central banks, tasked with managing their nation’s wealth and protecting its economic stability, are then driven to seek alternative assets.
Gold, a traditional safe-haven asset, is seeing renewed interest. Its intrinsic value and historical resilience make it an attractive alternative to a potentially weakening dollar. Central banks diversifying into gold are essentially hedging against the risks associated with U.S. debt and the ongoing economic uncertainties.
Gentile’s perspective suggests that investors should carefully consider their own portfolio allocations. While the U.S. dollar remains a dominant force in the global economy, increasing diversification into assets like gold could provide a hedge against potential devaluation and economic instability.
The long-term implications of these trends remain to be seen. However, the growing concerns about U.S. debt and the flight to gold highlight the importance of staying informed and considering a diversified investment strategy in an increasingly uncertain global economic landscape.