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Bonds general & USA, Germany

 ʘ ʘ ʘ Updated november 2, 2011

  - Seen in history - what happened in Greece is a perfect example of what is to happen with other Treasury Bonds - when the bubble bursts it's most of the time too late to act - Five past twelve to move out of Fixed interest instruments in Real Assets (incl shares).

My name is Bond and I have a license to kill your savings: SELL - SELL - SELL ! (this is an extremely dangerous and highly manipulated market).Definition of a DISASTER = out of control deficit spending + monetization of Debt + artificially low interest rates.August 2011: the 2009 Bond crash is happening right now under your eyes: Ireland, Greece, Portugal, Spain, are France, Belgium.....Bonds and especially Treasuries remain extremely dangerous and we maintain our SELL advice. (did you notice how fast the yield on Greek Treasuries went up from 3% to +12%!?) Bonds are artificially kept alive until the rubber band snaps and investors loose 85% of their savings in months' time.This is a totally manipulated and rigged market and DEATHLY dangerous....

30 year US-Treasury Bond price
Bullish Objective we had a 3rd historic top & bubble!
Resistance na
Support na
Bearish Objective ZERO
Technical pattern solid BEAR trend expressed in gold

30 Year Treasury Bonds in Gold - September 13, 2011 - A CRASH IT IS !!!...80% loss since 2000 or 10% loss each yearly.

  • This is a CLEAR SPOTLESS downtrend...or Gold becomes the ultimate Barbaric money and Bonds and Treasuries worthless.

  • Ever since 2001 it was safer and the yield was better for those holding Gold instead of Bonds. Or how to loose 70% and more of your savings in a couple of years only by holding on to Bonds

  • April 2011, the World's largest Bond Investor is shorting US Bonds.

  • Merlin is active in this market...and what a wonderful job he's doing...municipalities go broke but their bonds go up!

Our opinion:

  • Bonds are certificates of guaranteed confiscation (Ludwig von Mises) and the safest way to loose your savings.

  • The first phase of the banking crisis has only wiped out bank equities, but the second phase will wipe out bondholders. This is the time to buy long term puts on Treasuries (September 2009)...once the Bond market wakes up, it will be GAME OVER!

  • The FED, the ECB and the Bank of England have become the largest single buyer of debt. Quantitative Easing it is called but monetary inflation it is....such a policy always results in worthless money, worthless bonds and higher interest rates.

  • Remember the Top for Bonds has been seen last year and cycles are 25 to 27 years long...and Bonds will indicate the beginning of Hyperinflation.

  • Interest rates will rise AND so will GOLD!

  • Did you notice how fast Greek interest rates went up from 3% to +10% in only a week's time!? The 2009 Bond crash started in Europe (Greece) last February 2011 and has started in the USA and gets increasing Media coverage.

It is clear we had an ALL TIME LOW for long term yields and an ALL TIME HIGH for Bonds. (click on thumbnails to enlarge)


Gold and Bonds Nov 2011

10 y Gov. bond yields UK, EU

Click here for more Bond charts: Italy, Greece, Spain,...

10 year Government bond yields for Greece, Ireland, Portugal and Spain (Sep. 2011)

The PF and Long term candle charts below are of capital importance !

Hyperinflation occurs when a country’s bond market breaks. In other words, the sovereign nation is no longer able to fund itself. Its bonds fall (yields rise) to the point where the government has to print money or default. Rising interest rates cause the interest payments to consume too much of the overall budget. The government or central bank then begins to print money to fund its deficit. Then the citizens start to consume, knowing the currency is rapidly losing value. Demand has nothing to do with the cause or the onset of hyperinflation.

Why didn’t Japan have hyperinflation in the 1990s? It didn’t have to monetize its debt. It had the internal savings to be able to finance its budget. The same thing is true with the United States in the 1930s. Even though we devalued the currency, the bond market remained strong into the early 1940s, thus preventing runaway inflation.

The catalyst for severe inflation globally is the breaking of many bond markets. The UK, Japan and the US won’t be able to finance their budget gaps without monetization. The budget deficits are now larger and they come at a time of reduced global liquidity and reduced tax revenues. Global monetization will lead to severe inflation and hyperinflation.

The other point to make about severe or hyperinflation is the fact that it doesn’t come about steadily. The preconditions and causes are all the more subtle as hyperinflation occurs suddenly or dramatically. here for more fundamentals

USB pf1

Short term candle October 10 Chart comment
  • Augustus 22: RIGGED, MANIPULATED or

  • September 13: Central European banks re-depositing their funds with the Federal Reserve.

  • September 16: Last opportunity to get out of Bonds!?

  • October 4: the FED is converting short term into long term debt....because they expect higher interest rates.

  • October 10: European Central Banks and Commercial banks redeposit funds with the Federal Reserve because they stopped trusting each other.

  • November 2: Greece just provided the Bond market with its 3rd bubbl top.
Long Term candle October 10

ʘ ʘ ʘ Updated november 2, 2011

30 year US Treasuries Yield - The longer interest rates are artificially kept low, the stronger will be the reaction....and the faster they will go up once they move. Greece is the proof of the pudding.

Contrary to the general belief, it is not the Fed, nor the Reserve Banks, nor the Authorities who decide about long term interest rates but the market forces.Today these clearly indicate we will see higher long term interest rates. Higher rates will reduce consumption and increase SAVINGS. Very important for a potential future improvement of the world economies. In the short run the Authorities will do whatever lies in their power to keep interest rates LOW. Even if it means they have to keep buying Treasuries. By doing so they destroy SAVINGS/CAPITAL which is the life line for a good operating economy.

Artificially low interest rates chases capital and ALSO employment away. Interest rates will naturally rise in regions on the fringe of the major economies to attract capital. Later on (once more and more capital concentrates in the new growing economy) interest rates will decline. More taxation and at the same time keeping interest rates low, is adding injury to insult and speeding up the flight of Capital and the increase in unemployment. Authorities traditionally react to the increase in Unemployment by increasing the number of Government jobs. The cherry on the cake is the growing Regulation. Regulation always makes the marginal operation cost of the economy/society more expensive.

TYX pf1

Candle October 10

 Chart comment

  • November 16, 2010: Pimco gave a SELL SIGNAL and municipal Bonds are crashing.

  • February 14, 2011: the very important level of 4.6% has been broken.

  • March 4 : running into resistance...but watch out when the red resistance line is broken.

  • April 12 - July 1: watch out once the red resistance line is broken. Once the resistance line is broken, yields can geyser like we saw in Greece.

  • September 22: another historic

  • October 10: a FLIGHT into SECURITY they think and hope it is.

  • November 2: part of the action is Bank/Financial  Technical

ʘ ʘ ʘ Updated november 2, 2011

American Municipal Bonds crash: has recovered miraculously but is still about to start the 2nd down leg of the crash! There is no doubt MERLIN (the FED, the PPTeam,...) and QE is at work here. Such is unseen...bonds of bankrupt Municipalities rising in price....[This chart will end up in the History books.]

 Short term candle   Chart comments


In a system of Real Money (Gold and Silver) it is the Money which regulates the economic activity and the general level of interest rates.

World Bond markets move in symphony. We have GLOBAL MARKETS. What happens in Greece is the direct reflection of what happens in the USA and the UK is a precursor of what is to happen in the rest of the world.

History is being written. Bringing down interest rates and keeping them low is EXACTLY the opposite of what should be done. History shows over and over again that the authorities are champions for doing the wrong thing at the right time. Ludwig Von Mises explains clearly that one must INCREASE interest rates to INCREASE SAVINGS which are to be used for fundamentally sound INVESTMENTS. Authorities are doing exactly the opposite: low interest rates increased consumption and created the real estate bubble (dead capital) hereby debasing the savings of the Baby boomers.

Today Authorities do all they possibly can to keep the rates down and the economy alive. It goes that far that the FED buys US treasuries as soon as other buyers fail. Low interest rates keep the rate of Foreclosures low and troubled Credit Card companies alive. However, as explained by Ludwig von Mises, at a certain point the market forces take the final decision. The longer interest rates are suppressed, the stronger they will veer up once time has come.

Chart below: European bonds have also reversed trend. The earlier break down resulted in a false break and will now built a double Top. Authorities are injecting Trillions (Quantitative Easing) in the economy in order to keep it alive. We know this won't - in the medium term run - save the system from collapsing. It NEVER did in the past and it will not today. Only after the misallocated funds have been cleansed out of the system a fresh boom can be initiated! By artificially lowering interest rates, the authorities are doing nothing more than increasing the misallocation of funds..

In the long run, interest rates rise as a consequence of the inflationary policies of the 'authorities and banks' and the latter adjust what we call 'the official interest rate' to the conditions of the market.

ʘ ʘ ʘ Updated november 2, 2011


  • May 4: Greek long term government bonds yield are +10%, Portuguese government bond yields are +5%..

  • July 22 - August 13: also here we have a similar pattern. The 2008 deleveraging and the strong German Bond market of 2010 can be compared with the deleveraging of 2008.

  • September 21: note how SIMILAR the EU bond-chart is to the chart of dollar denominated US Treasuries.

  • December 2: this WAS the historic top of the Deutsche Mark (German) bond market.

  • April 12, 2011: short term uptrend line broken = bearish.

  • July 1 - October 10: German Euro-Bonds are still considered a SAFE HEAVEN.

  • November 2: German Yields off their record levels indicate the Greek crisis is solved (for the time being)

Updated July 1, 2011 -

Will British government bonds break through their support line? - the weaker economies go first: Iceland, Greece (yield +10%), Portugal (yield +5%) , Italy, Spain, Ireland...who's' next? -



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