Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Own U.S. Treasury Bonds or Gold and Silver?

Commodities / Gold and Silver 2011 Oct 09, 2011 - 09:07 AM GMT

By: George_Maniere


Best Financial Markets Analysis ArticleThe drop in price of gold and silver is because they are considered to be in a bubble. In my opinion a bubble is when the underlying asset trades in high volumes at prices that are inflated to their true values. There are economists that assert that asset prices often deviate from their intrinsic values. Because it is often difficult to determine what the intrinsic value of an asset is bubbles are often seen in retrospect like when sudden drops in prices appear. They are seen as a crash or a bubble burst. It is important to recognize that prices of a bubble can fluctuate erratically and make it impossible to predict from supply and demand alone.

The new safe havens are perceived as the dollar and US Treasuries. To prove this point the media points to that fact that gold and silver have sold off. They pointed to the strengthening of the dollar and reported that the safe haven was US Treasuries. Please see the chart of the TLT below.

As we can see on this chart the treasuries ran up from August to October as the dollar grew stronger. However what the media failed to mention is that the United States is bankrupt! Imagine investing in US debt for 30 years. It reminds me of the old cartoon where the guy says I will gladly pay you for a hamburger next Tuesday for one today. As if he ever had any intention of paying for it in the first place. Investing in 30 year Treasuries is the ultimate bubble.

I admit it. I have been a gold and silver bug since I was 8 years old. As far as I know I’m the only 13 year old that asked for a double eagle for my birthday present. You should have seen the look on my dad’s face when I came out with that. Back then it was a hobby and my grandma taught me the love of numismatics. Now it’s serious business.

There are too many very smart people who couldn’t care less about gold and silver. Who am I to say they’re wrong? They chose to invest in high yielding, large cap stocks and are content to trade their positions (buy on the dips and sell on the rips) and collect their yields while they wait. In all honesty, half my portfolio is a diversified collection of these stocks. The other half however is more risky. I like SPXU and UPRO, which are plays on the S&P.

I like the gold and silver trade. My favorite junior miner is US Gold (UXG) and while the sheep were herded into the US treasuries thanks to the talking heads, I was buying US Gold (UXG) at @.$2.22 a share and my favorite silver stock Silver Wheaton b(SLW) at $27.45 a share. Please see these two charts below and notice how they correlate to the run up in the TLT.

Please take note that as TLT hit its highs UXG hit extreme lows. Please see chart of SLW below.

Again, please take note that as TLT hit its highs SLW hit its extreme lows.

In conclusion, the treasuries have been very strong in the last few weeks but it won’t last. The dollar which has been beaten down has for a short bright shining moment it had its day in the sun as it was the best house on the worst block. Compared to the imminent Greek default, the contagion in Europe, the global economic slowdown and the tepid economic conditions here in the treasuries are on the way back down. Let us not forget that no matter what may come out of the mouths of the politicians a key to this administration is to keep the dollar low. This is the only way we will be able to pay off the staggering debt we have amassed. A dollar that is worth 70% of what we borrowed makes it 30% easier to pay back the debt. This will not stop. The debasement of the currency will continue.

After gold’s parabolic move it is healthy for a stock to pull back before it begins its move up again. My expectation is for gold to rise to a minimum of $2000.00 by the end of the year and if we use the generous historic ratio of gold to silver of 50 to 1 silver will be $50.00 by the year’s end.

By George Maniere

In 2004, after retiring from a very successful building career, I became determined to learn all I could about the stock market. In 2009, I knew the market was seriously oversold and committed a serious amount of capital to the market. Needless to say things went quite nicely but I always remebered 2 important things. Hubris equals failure and the market can remain illogical longer than you can remain solvent. Please post all comments and questions. Please feel free to email me at I will respond.

© 2011 Copyright George Maniere - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - 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