Back in January, when the market was watching in shocked silence as oil prices were crashing to decade lows and as concerns emerged that Saudi Arabia may need to commence selling its vast, if unquantified, USD reserves, we wrote a post titled "Attention Finally Turns To Saudi Arabia's "Secret" US Treasury Holdings" where we noted something very surprising: whereas we do know that Saudi Arabia is the owner of the world's third largest USD reserves...
... their actual composition remains as a secret, because while the US discloses the explicit Treasury holdings of all other nations, Saudi Arabia's holdings, for some unknown reason, are not officially disclosed.
"It’s a secret of the vast U.S. Treasury market, a holdover from an age of oil shortages and mighty petrodollars,"Bloomberg wrote of Saudi Arabia’s US Treasury holdings.
"As a matter of policy, the Treasury has never disclosed the holdings of Saudi Arabia, long a key ally in the volatile Middle East, and instead groups it with 14 other mostly OPEC nations including Kuwait, the United Arab Emirates and Nigeria,”Bloomberg goes on to note, adding that the rules are different for almost everyone else. Although Saudi Arabia's "secret" is protected by "an unusual blackout by the U.S. Treasury Department," for more than a hundred other countries, from China to the Vatican, the Treasury provides a detailed breakdown of how much U.S. debt each holds."
So who does know how much US paper the Saudis are sitting on? Well, the Saudis of course,"a handful of Treasury officials," and some bureaucrats at the Fed, Bloomberg says, noting that “for everyone else, it’s a guessing game."
Yes, a “guessing game,” but one that will very soon have profound consequences for markets and for geopolitics.
We closed with a simple, if suddenly very prophetic question:
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