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Treasury Bonds 5 Years of Interest Destroyed in 6 Weeks!

Interest-Rates / US Bonds Jan 26, 2009 - 03:50 PM GMT

By: Money_and_Markets


Best Financial Markets Analysis ArticleMartin Weiss writes: Last month, investors from all over the world — spooked by the debt crisis — flocked to buy long-term U.S. Treasury bonds.

They bought U.S. bonds with money earned from China's export boom. They scooped up bonds with money gleaned from the savings of millions of Japanese families … with government money … oil money … even drug money.

Investors large and small, haughty and humble — Asian central bankers, mid-East sheiks, and retired Americans living on fixed income — all piled into Treasury bonds at the same time.

And they all had a similar goal: To escape the terrifying dangers … find what they thought was a safe haven … and grasp for something — anything — better than the near-zero yields on short-term Treasury bills.

M any reached out as far as they possibly could in maturity, buying the longest Treasury bond in existence — the 4.5% “long bond” expiring May 15, 2038.

But as the Treasury bond buying frenzy reached a crescendo on December 18 of last year, they didn't get the coupon yield of 4.5%.

Instead, they had to pay such a high price for the bond, they wound up locked into the lowest Treasury-bond yield in history : A meager 2.52%!

That was bad enough.

But the saga of woes does not end there. The real disaster came with the events that have ensued since …

For each $10,000 in face value bonds, they paid an exorbitant $14,091. And now, the value of that bond has plunged to only $12,200, delivering a shocking loss of $1,890.

The summary of these results reads like a fixed-income horror story:

Annual yield: A meager 2.52%
Market loss: 12.85%
Years of
interest lost:
12.85/2.52 = 5.3
Time elapsed: 6 weeks

Conclusion: They lost the equivalent of more than FIVE YEARS OF INTEREST in just SIX weeks.

It was easily among the most disastrous Treasury bond investments of all time! Meanwhile, investors who followed our recommendation to buy strictly short-term Treasury bills didn't lose a penny.

Now do you understand why we've been warning you not to touch long-term bonds with a ten-foot pole? And now do you see why we've been working so hard to find other, alternative, depression-proof sources of income and profits for you?

Mike, Larry and I tell you all about these unusual dangers — and unusual opportunities — in our video “7 Startling Forecasts for 2009.”

We explain exactly what we think is going to happen this year and what you should do about it immediately.

And we are extremely gratified with the response so far: Just in recent days, a grand total of 65,431 individual investors have come to our website to view it.

Don't be left behind. Especially not in these trying times! Turn up your computer speakers and click on the link below.

Good luck and God bless!


Warning: The video comes offline Tuesday. So you only have a day left to see it.

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 .

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