Rates now negative on inflation-protected and regular Treasuries

Section:

Investors Seek Safety of U.S. Treasuries

By Michael Mackenzie
Financial Times, London
Thursday, January 19, 2012

http://www.ft.com/intl/cms/s/0/ad85b014-42b5-11e1-97b1-00144feab49a.html

Investors bought inflation-protected Treasury securities at a negative interest rate for the first time on Thursday, demonstrating the depth of concerns that Federal Reserve efforts to stimulate the economy could lead to higher inflation in the future.

The $15 billion in Treasury inflation protected securities, or Tips, were sold at a negative yield of about 0.046 per cent. Investors could still make money on their holdings because the principal of such securities increases if inflation rises.

Bill O'Donnell, strategist at RBS Securities, said that investors were accepting "a short-term cost for a potential long-term gain." Treasury securities of all kinds are finding favour as a haven as investors flee the market turmoil in the eurozone.

... Dispatch continues below ...



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Investors are turning to Tips as the real returns on fixed-rate Treasuries also have turned negative, meaning the yields are less than the current rate of inflation.

Investors are buying 10-year Treasury notes with a yield of 1.99 per cent. Meanwhile, consumer price data released on Thursday showed that US core inflation, which excludes food and energy, for the year ending in December, advanced 2.2 per cent, its fastest pace of growth in four years. The consumer price index was flat for the second successive month.

The low yields on Treasury securities reflect the impact of Federal Reserve's Operation Twist programme, under which it buys longer-dated bonds, with the hope of pushing down long-term interest rates and thereby stimulating economic growth. US jobless claims dropped by 50,000 to 352,000 in the week ending January 14, the lowest level since April 2008, the Labour Department said.

"The big gorilla in the room is the Fed," Mr O'Donnell said. "They are buying up a lot of debt."

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Golden Phoenix Receives Inferred Gold Resource Estimate
For Santa Rosa Mine in Panama: 669,000 Oz. Gold, 2.1 Million Oz. Silver

Company Press Release
January 3, 2012

Golden Phoenix Minerals Inc. (OTC: GPXM) reports that on behalf of Golden Phoenix Panama S.A., the joint venture entity that owns and operates the Santa Rosa gold mine in Panama, it has received from SRK Consulting (U.S.) an initial resource estimate for Mina Santa Rosa.

The Santa Rosa project is a volcanic-hosted epithermal gold-silver deposit previously operated as an open pit-heap leach operation. Production ceased in 1999 in part because of low gold prices.

SRK Consulting reports an in-situ inferred resource at the former Santa Rosa and ADLM pits totaling 23.1 million metric tonnes at 0.90 grams/tonne gold, for a contained 669,000 ounces of gold at a 0.30 g/t gold cutoff. The resource also contains an average grade of 2.87 g/t silver for a contained 2.1 million ounces of silver.

John Bolanos, Golden Phoenix's vice president of exploration, remarks: "In addition to SRK's inferred resource estimate of 669,000 contained ounces of
gold, the Santa Rosa project has an additional unspecified volume of mineralized material on former heap leach pads throughout the property. We expect to begin assessing this additional material in the near future."

For the company's full statement, including a table detailing the resources at Santa Rose, please visit:

http://goldenphoenix.us/press-release/golden-phoenix-receives-initial-ni...