My OperaThe Bond Market Place Independent Of Federal Reserve Action Has Declared An Interest Rate Hike
Friday, January 25, 2008 10:15:26 PM
I. The Bond Market Place Independent Of Federal Reserve Action Has Declared An Interest Rate Hike
US Treasury Bonds bonds have traditionally, and especially over the last seven months, been a 'lifeboat of safety', from the sinking ships of stocks and real estate.
But, in response to reports of surging inflation, the steepening yield curve, the financial troubles of municipal guarantors AMBAC and MBIA, and concerns of the Federal Reserve Chief dropping money onto and into the banks, in helicopter like ways, to preserve their solvency, the bond market place, the week ending 1-25-2008, has declared a defacto interest rate hike, during the same week that the Federal Reserve lowered the central bank interest rate by 0.75%.
Here are the yield curve charts which 'show steepening'.
While the Fed controls the interest rate at which the banks borrow, the bond market place determines the marketplace interest rate on US Government Treasuries; and the market place has called interest rates higher, and the Treasury bonds lower, as evidenced by a downturn in the 20 to 30 year US Treasury ETF, TLT, and an upturn in the Rydex Mutual Fund, RYJUX, which operates at 100% inverse of the 30 Year Government Bond.
This is a monumental change; a stupendous change that has gone unnoticed by many.
Can there be any doubt that this dramatic thing has happened?
Here's the clear, cogent and convincing evidence for the statement that the bond market place independent of federal reserve action has declared an interest rate hike which results in US Treasury bonds being called lower in value:
SHY Weekly
SHY Daily
IEF Weekly
IEF Daily
US Treasuries In The Futures Market
The 20 to 30 Year US Treasuries ETF Daily
II. Check the charts for yourself: The government bond bubble has burst.
The 20 to 30 year Government Bond ETF, TLT.
The Rydex 30 year inverse 30 year mutual fund RYJUX
The 30 Year Treasury in the futures marketplace $USB
III. Investment Application
Bonds no longer store wealth ..... an investor does not want to own a government bond of any type .... it's time to sell them short .... a wise investor enters a sell order while these are at the top and going down ... time is of the essence.
Gold, and a limited amount of reasonable, and wise short selling, is now the sole and sustainable means of garnering and preserving wealth.
The financial rewards that are coming to those who short sell the municipal bonds, closed end municipal bond funds, as well as the long out U.S. Government Treasury Bond ETF, or go long RYJUX, is most definitely going to be better than what can be expected from short selling stocks, like the ones I have been suggesting one short sell since the first of the year, whose list and performance can be found here.
The specific recommendation: I recommend that one buy the gold ETF, GLD, and use margin credit to sell the municipal bond ETFs, and the closed end municipal bond fund VGM, and its peers EIM, BKK, CXE and PZC; and that one start to gradually 'dollar cost average' in sells of the 20 to 30 year US Treasury ETF, TLT, and that one invest in Rydex RYJUX.
For your investment help, here are the charts for the closed end municipal bond funds VGM, EIM, BKK, CXE and PZC;
and their comparative performance is found by clicking here.
VGM
EIM
BKK
CXE
PZC
One needs to be careful with shorting, when one has margin credit based upon gold, as gold is a commodity, and is subject to drops down as well as great moves up like today; gold could easily fall to $840 before going onward and upward.
Many ask about risk.
Short selling municipal bonds, and closed end municipal bond funds represents low risk and great reward: It's always best to short at a market top like the one in closed end municipal bond funds -- the last thing a short seller wants is a short sell coming back up on oneself: the likelihood of VGM, and its peers going higher is about nill. When one gives thought to the downward potential of municipal bonds, that has come with the downgrade by Fitch of AMBAC on Friday January 18, 2007 as reported by Stephen Bernard and Leslie Wines of the Associated Press, one can see the reward is great.
That announcement is the 'nail in the coffin' for the eventual default of debt guarantors AMBAC and MBIA, and gives impetus for short selling the municipal bonds and closed end mutual bond funds.
So, in conclusion: buy the gold ETF, GLD, and use margin credit to
1) sell the municipal bond ETFs,
2) sell the closed end municipal bond fund VGM, and its peers EIM, BKK, CXE and PZC,
3) gradually 'dollar cost average' in sells -- puts of the 20 to 30 year US Treasury ETF, TLT,
4) and invest in Rydex RYJUX.
US Treasury Bonds bonds have traditionally, and especially over the last seven months, been a 'lifeboat of safety', from the sinking ships of stocks and real estate.
But, in response to reports of surging inflation, the steepening yield curve, the financial troubles of municipal guarantors AMBAC and MBIA, and concerns of the Federal Reserve Chief dropping money onto and into the banks, in helicopter like ways, to preserve their solvency, the bond market place, the week ending 1-25-2008, has declared a defacto interest rate hike, during the same week that the Federal Reserve lowered the central bank interest rate by 0.75%.
Here are the yield curve charts which 'show steepening'.
While the Fed controls the interest rate at which the banks borrow, the bond market place determines the marketplace interest rate on US Government Treasuries; and the market place has called interest rates higher, and the Treasury bonds lower, as evidenced by a downturn in the 20 to 30 year US Treasury ETF, TLT, and an upturn in the Rydex Mutual Fund, RYJUX, which operates at 100% inverse of the 30 Year Government Bond.
This is a monumental change; a stupendous change that has gone unnoticed by many.
Can there be any doubt that this dramatic thing has happened?
Here's the clear, cogent and convincing evidence for the statement that the bond market place independent of federal reserve action has declared an interest rate hike which results in US Treasury bonds being called lower in value:
SHY Weekly
SHY Daily
IEF Weekly
IEF Daily
US Treasuries In The Futures Market
The 20 to 30 Year US Treasuries ETF Daily
II. Check the charts for yourself: The government bond bubble has burst.
The 20 to 30 year Government Bond ETF, TLT.
The Rydex 30 year inverse 30 year mutual fund RYJUX
The 30 Year Treasury in the futures marketplace $USB
III. Investment Application
Bonds no longer store wealth ..... an investor does not want to own a government bond of any type .... it's time to sell them short .... a wise investor enters a sell order while these are at the top and going down ... time is of the essence.
Gold, and a limited amount of reasonable, and wise short selling, is now the sole and sustainable means of garnering and preserving wealth.
The financial rewards that are coming to those who short sell the municipal bonds, closed end municipal bond funds, as well as the long out U.S. Government Treasury Bond ETF, or go long RYJUX, is most definitely going to be better than what can be expected from short selling stocks, like the ones I have been suggesting one short sell since the first of the year, whose list and performance can be found here.
The specific recommendation: I recommend that one buy the gold ETF, GLD, and use margin credit to sell the municipal bond ETFs, and the closed end municipal bond fund VGM, and its peers EIM, BKK, CXE and PZC; and that one start to gradually 'dollar cost average' in sells of the 20 to 30 year US Treasury ETF, TLT, and that one invest in Rydex RYJUX.
For your investment help, here are the charts for the closed end municipal bond funds VGM, EIM, BKK, CXE and PZC;
and their comparative performance is found by clicking here.
VGM
EIM
BKK
CXE
PZC
One needs to be careful with shorting, when one has margin credit based upon gold, as gold is a commodity, and is subject to drops down as well as great moves up like today; gold could easily fall to $840 before going onward and upward.
Many ask about risk.
Short selling municipal bonds, and closed end municipal bond funds represents low risk and great reward: It's always best to short at a market top like the one in closed end municipal bond funds -- the last thing a short seller wants is a short sell coming back up on oneself: the likelihood of VGM, and its peers going higher is about nill. When one gives thought to the downward potential of municipal bonds, that has come with the downgrade by Fitch of AMBAC on Friday January 18, 2007 as reported by Stephen Bernard and Leslie Wines of the Associated Press, one can see the reward is great.
That announcement is the 'nail in the coffin' for the eventual default of debt guarantors AMBAC and MBIA, and gives impetus for short selling the municipal bonds and closed end mutual bond funds.
So, in conclusion: buy the gold ETF, GLD, and use margin credit to
1) sell the municipal bond ETFs,
2) sell the closed end municipal bond fund VGM, and its peers EIM, BKK, CXE and PZC,
3) gradually 'dollar cost average' in sells -- puts of the 20 to 30 year US Treasury ETF, TLT,
4) and invest in Rydex RYJUX.
