Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Even Warren Buffett Is Now Saying U.S. Treasury Bonds Could Crack!

Interest-Rates / US Bonds Aug 22, 2009 - 01:14 AM GMT

By: Money_and_Markets

Interest-Rates

Best Financial Markets Analysis ArticleMike Larson writes: I’ve made no secret about my view on U.S. bonds and the U.S. dollar …

I’ve minced no words, and cut no corners …


Instead, I have given you specific, consistent guidance on those fronts: Namely stay the heck away from long-term Treasuries and hedge yourself against the government’s unofficial policy of trashing the greenback.

It started last year in my December 5 Money and Markets column, when I issued the most strident warning I’ve EVER released on bond prices. I labeled long-term Treasuries “the biggest bubble of all” and warned you that …

“No government, or central bank, is bigger than the bond and currency markets. Foreign bondholders aren’t going to sit idly by while any government … even the government of the U.S. … openly decides to trash its currency by printing it with reckless abandon. And they aren’t going to sit by while the government manipulates prices higher.

“They’re going to say ‘Sold to you!’ and take their money elsewhere.”

Then on March 27, I compared the finances of the U.K. and the U.S., noting that we’re both in the same boat. I pointed out that policymakers were “transforming a Wall Street debt crisis into a potential debt crisis in Washington.” And I said that …

“Foreign investors have already started unloading ‘agency’ debt — bonds sold by Fannie Mae and Freddie Mac. In addition, China has warned that it’s getting nervous about its massive U.S. Treasury holdings.

“So is it too much to imagine that U.S. bonds will soon have their day of reckoning? I sure don’t think so.”

Now's the time to hedge yourself against the government's unofficial policy of trashing the greenback.
Now’s the time to hedge yourself against the government’s unofficial policy of trashing the greenback.

Finally, a few weeks ago, on August 7, I said that the never-ending wave of debt washing over the market would have dire long-term consequences. My warning:

“In the case of the U.S. government, our ever-increasing debt load means one of two things is going to have to happen. Either …

1. Economic growth is going to surge, sending tax revenue through the roof and allowing us to pay off all these bills, notes, and bonds.

OR …

2. Taxes are going to have to rise sharply to make good on our debts.”

But Don’t Just Take My Word For It … Take Buffett’s! Take PIMCO’s!

Now, in a devastating broadside from the editorial page of The New York Times, the greatest American investor of all time is warning of the very same things. Warren Buffett, in a piece entitled “The Greenback Effect,” wrote on Wednesday [emphasis mine]:

“Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible … Still, their threat may be as ominous as that posed by the financial crisis itself.”

And …

“Our immediate problem is to get our country back on its feet and flourishing — ‘whatever it takes’ still makes sense. Once recovery is gained, however, Congress must end the rise in the debt-to-G.D.P. ratio and keep our growth in obligations in line with our growth in resources.

“Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt.”

Buffett's warnings speak volumes about the seriousness of this problem.
Buffett’s warnings speak volumes about the seriousness of this problem.

That’s not all …

Buffett also noted that our government is spending $1.85 for every $1 it takes in from taxes … that ever-increasing purchases of Treasuries by foreign investors are “no sure thing” … and that our deficit is on track to hit 13 percent of GDP, more than double the previous non-wartime record of 6 percent.

Sound familiar?

It should. Because that’s exactly what we at Weiss Research have been warning you about for several months! But the fact that Buffett is weighing in speaks volumes about the seriousness of this problem.

Officials at PIMCO, the world’s largest bond fund manager, are also warning about the consequences of our government’s actions.

PIMCO Managing Director Curtis Mewbourne just wrote a lengthy piece about how emerging markets are supplanting developed markets as the focus of economic power. He added that this has serious implications for the dollar, saying [emphasis mine] …

“While we have not yet reached the point where a new global reserve currency will arise, we are clearly seeing a loss of status for the U.S. dollar as a store of value even in the absence of a single viable alternative. In combination with other factors, that likely means a continuing devaluing of the U.S. dollars versus other currencies, especially the [emerging markets] currencies.”

Again, the issue isn’t so much WHAT is being said but WHO is saying it. The warnings you first got from us at Weiss Research months ago are now being echoed in the halls of power! And that could have serious implications for the financial markets.

Bottom line: You simply must take steps to protect yourself from falling bond prices, rising interest rates, and a weak dollar.

Until next time,

Mike

P.S. I’ve given you some big-picture pointers on how to protect yourself from falling bond prices, rising interest rates, and a weaker dollar in previous Money and Markets columns. But I’m now recommending these two very specific steps for more aggressive traders.

If you’re interested in going for hefty profits as bond prices tank, I urge you not to wait around. Learn what steps to take right now.

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules