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Sell Bonds Buy Silver
Just like the 1970s
The following article is the first I have seen that shows that interest rates in the all important
Treasury market are EXPECTED to go up…
This documents sends me three messages:
1. that the ability of the Fed to artificially suppress interest rates is weakening
2. it is perfect time to BOTH expect higher interest rates (in my case short the June 2022 Eurodollar future contract) AND buy silver
3. the article fails to mention the ELEPHANT in the room- the US Government will default UNLESS. It raises $1/2T ($500,000,000,000.00) worth of Treasuries before December
Instead, the article claims it wouldn’t take much news of declining inflation to cause a significant rally in the bond market…”even a modest cascade of deflationary news could wreak havoc on what is easily the most crowded trade on Wall Street right now.”
I disagree and think it is VERY hard for the government to prevent a further increase in BOTH interest rates AND gold and silver prices
So far in 2021 (ie the Biden Administration) the government has used short term news of inflation being under control to unleash- in the commodity futures markets- massive buy orders for interest rate futures and massive sell orders for precious metal futures (gold or silver). This has worked by uncovering stop orders that many investors (including alas, yours truly) have used to protect themselves against taking major losses. These massive and sudden orders have worked in the sense of convincing most investors that the Fed continues to control interest rates.
But the last two weeks have seen a significant change- a rise in interest rates and a simultaneous rise- NOT fall- in gold and silver prices. I believe this means investors are putting more weight on continuing high inflation and less weight in the Fed’s power to artificially suppress both interest rates and the price of gold during a period of high inflation. Which means a bear market in bonds and a bull market in gold and silver- as we saw in the inflationary 1970’s.
Thus I am speculating via a position short bonds (ie short the June 2022 Eurodollar) and long precious metals (in my case long silver futures).