US Treasury Market, Jim Rogers Interview

The 10 Year US Treasury Yield has now hit over 3.5% which has been the story on Wall St. since QE II was announced. It appears that investors are finally beginning to see that despite the Fed’s interference, US Treasury bonds are worthless assets in a time where the Fed Chairman openly claims to be endorsing a pro-inflation policy even as the CRB Index is up over 22% since July.

US 10 Year Yield

ProShares UltraShort 20+ Year Treasury ETF (TBT)

Closed above a 6 month rounded bottom pattern on high volume.

SPDR Nuveen Barclays Cap Clfrn Mncpl Bnd (CXA)


As you can see above, US Treasury Debt is not the only type of fixed income that is in jeopardy. California Municipal Debt is also beginning to resemble what the yield on those securities should look like. I don’t believe that this is quite the end of the bond market as many commodities bulls have been predicting, but this definitely appears to be the first major dent in the confidence that those debts are payable.

Getting back to commodities, recently posted an interview that did with commodities Guru Jim Rogers who got his outlook on gold and silver, as well as the bond market.

Following is the interview with Jim Rogers:

Now, you’ve said that gold will hit $2,000. Do you know when — crystal ball?

Rogers: I wish I knew when, watch you can get all these answers to market timing; I am no good at it. I explained to you that gold will be $2,000 certainly in the decade, it’ll probably be much higher than $2,000 in the decade but maybe even sooner I don’t know. But to me it seems pretty clear that it’ll go to at least $2,000. If you adjust the old high back in 1980 for inflation, gold should be over $2,000 now.

What about silver?

Silver at the old high was $50, silver’s at $30 now. Silver can certainly go to $50 again and probably much much higher over the next decade.

It just seems you’d be selling your gold this year with all the hype that’s been going on.

There’s been some hype about it [but] most of the public, for instance, is selling gold. If you walk around the streets in nearly any American city you’ll see signs — sell us your gold. The public is in there selling their gold, selling gold jewelry, as fast as they can.

I spoke not too long ago to 300 major international money managers from around the world, sophisticated people with a lot of money under management. And the moderator, I didn’t know why he said it, but he said, “How many of you have ever owned gold?” Seventy-six percent of those people had never owned gold.

I was stunned, so was the moderator, so was everybody, stunned at how few people actually had ever owned gold, so it’s still an under-owned asset, and think about zinc. He didn’t say zinc or cotton or some of the other commodities. None of them would have ever said they have ever owned zinc and cotton and other commodities, so the commodity bull market has a long way to go.

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Rogers points out the discrepancy between what the media is saying about gold hype and provides tangible facts regarding the amount of experienced financiers that have owned or traded gold in their past. He also projects that silver will eclipse $50/oz, I agree with that forecast and believe that it can be done by the end of next year. Silver stocks are on the rise and volume is bound to increase in the near future. I recommend accumulating shares now before buying volume picks up. The options market also opens many doors, out of the money calls can be a way to increase gains with less capital expenditure. Pick a company that is trading below its enterprise value per ounce and buy an out of the money call near the strike price that it should be trading at.

About Aaron Basile
Day Trading and Swing Trading Ideas, Certified Personal Trainer, Power Bodybuilding, Avid Sports Fan (NBA, NFL)

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