ProShares UltraShort 20plus Year Treasury (TBT)

[SilverSurfer]

big what?

[eddyimano]

Time to go big in a month or so!

[SilverSurfer]

call was good on Bonds eddyimano, btw, there is really no need to send pm which I can not reply with pm..... RE:



My guys call... (agree)



Right now, since gold and silver have tanked so hard, I would not be surprised to see a bit of a bounce. But a bounce is all it would be. As we head into January, look for major support in gold at:
$1,029.70
$ 987.00
One of those two levels should be hit and represent a major low.
In silver, watch $16.43 and $15.18 for major support and a final low.

[Shaka_Zulu]

You got that right. The 10yr will hit 3.75% for the sweet spot which will be perfect for all sides equities and bonds.

This is going to $90-100, the long term trend was broken in mid June, and has been accumulating on the 50MA.

Loving it. Plus there is wonderful price action to trade

[SilverSurfer]

shaka khan be right with a breakout

[Shaka_Zulu]

On its way to makeng new highs in the coming weeks

[Crusader]

Looks like I got in just in time,

TBT has a long way to go. $150?

[Crusader]

Getting ready? Less than 2 hours....


Taper mention in Fed minutes? You bet!

[SilverSurfer]

k

[eddyimano]

It is easy bonds will drop big in the future, not too long away. It is obvious now.

[SilverSurfer]

these leverage etf's suffer decay but fine for a trade.... Tor a long hold avoid TBT or TMV but TBF will work or just Short TLT

[richsean]

what is best way to short the 30 yr bond? i heard about $100,000 contracts. thanks.

[SilverSurfer]

good article you sent... another >
http://www.oftwominds.com/blog.html

[eddyimano]

FED's game is getting closer to over.
FED is reducing bonds purchasing? Yeah, right.

[SilverSurfer]

Bob Pisani just said that higher interest rates will be "Met" by the Fed with more QE. There is a ceiling on how far up "they" will let them go. So, let me get this straight. Savers trashed. Banks can't afford to lend because the return is too measly to mitigate risk. And they just borrow at near 0% and buy safe debt at 2% all day long. If the economy gets going to the point where all the liquidity could gain velocity and cause inflation, the U.S. can't afford to fund it's debt.... so interest rates = growth,, have a ceiling?

[SilverSurfer]

re: What do you think of TBT in the future?

Will the economy take off in the near future or will slow or negative world GDP drag U.S. down ? T rates are a factor of supply/demand and growth/inflation..... I think the current blip up is temp... and we see some stock market down = flood back into T-Debt until the deflation threat is finally smoked out by even greater World Wide Central Bank Bond Buying and Bail Outs....It's a process not an elevator,,, imho

[eddyimano]

31 years of bonds bull market will be over soon. Before the bull market was bear market for 35 years. Jim Rogers says. Once bonds market crushes, it will be bad for long time. Let's see.

[Crusader]

This is a glacial and tricky play,

the Great Rotation out of fixed income is slow in developing, but if the SnP rushes up to 1600, then TBT will have its day.

[mudslog]

You are a smart person to investigate further. I know from experience that you can be right about theories, but there is always a variable that is an outlier that can change things. In the list of priorities, I look at three things...the correlation between oil, the dollar, and bonds. We both know that when the stock market tanks, the bond market is swamped with money. In correlation, the oil market also tanks in unison. However, there are some divergent things that tell me that this will not always hold true. To prove my theory, there must be something else money will flock to when they no longer buy stocks, bonds etc. Many people think this is gold, silver. On the surface, this makes sense, but you can't eat gold, silver, and you can't burn it as fuel. Commodities such as food and fuel will rise to the surface. Thanks for your input. Please continue. I have not found many people that can relate.

[Gregory_]

One way that other countries convert their currency into dollars is to buy our bonds.

This provokes thought. I suppose converting directly to dollars requires fees, as opposed to buying bonds that provides interest.

This is fascinating. I believe I am beginning to understand why negative interest rates can exist on bonds. Originally, I considered that only a country's government would be silly enough to purchase negative interest rate bonds. Eventually, this led me to perceive that a German citizen might purchase negative interest rate bonds in order to protect themselves against a potential Euro dissolution. Being in the bond would likely provide them an immediate conversion to the surviving currency (possibly the Deutsche Mark).

Now, I see this in a different light. As long as the negative interest rates are less than the fees associated with direct currency conversion, it is still economical for a country to purchase bonds. This provides them a cheaper means of trading in local currencies.

Hmm... might require more thought, but I can see the purpose behind the action. When I read this, my first response was disbelief, but perhaps it does make sense.

Foreign governments certainly are a major factor to consider after all. I knew they would be; I just could not place them correctly until now. This still requires further study.

[Maxismydog]

Keep in mind the total debt levels in the 70's compared with now. Ultimately we can't predict net inflation as the outcome, but I have a hard time believing otherwise. The government's worst nightmare is deflation. The public will demand inflationary actions. I have some gold charts to peruse through that I can share later.

[mudslog]

Good post and the scenarios are certainly conceivable. What makes the dollar stronger than other currencies is not the dollar itself, but the fact that you have to convert your own respective currencies to the dollar to buy Middle Eastern oil as part of the agreement between us and the Saudis that was made in the 70's in return for our protection of them. Japan is a good indicator of what is happening/could happen except for that one major fact. Therefore, any disruption in that agreement, price of oil and/or supply etc. would throw a big variable into the equation. One way that other countries convert their currency into dollars is to buy our bonds. As the demand for oil rises in countries such as China, the more bonds China will buy....until the dollar is no longer the standard to buy oil. Then watch out. When you see the Obama administration go against things such as the Keystone pipeline, there are more reasons than meets the eye. As Middle Eastern oil demand deteriorates, so will the dollar along with the bond market. Just my opinion of course.

[Gregory_]

Here is an excerpt from one of my recent posts on another board. It covers some of my thoughts on interest rates.

---------------------------
My perspective is that gold is elevated due to negative real interest rates. Depending on your view of CPI, whether you roll with the current government number or still calculate it as we did in the 70s and 80s, real interest rates are either slightly negative or VERY negative.

If you stick with the negative real interest rate perspective, the question is, "When will real interest rates move into positive territory?" From what I gather, Japan chose the route of low interest rates to combat their economic issues in the late 80s and early 90s, and interest rates there have remained low for over 20 years. Perhaps, we are following in their footsteps. If so, we could see low interest rates and consequently negative real interest rates for decades.

I look at it slightly differently. It seems much more realistic to just consider what would happen if interest rates rose here in the U.S. Perhaps, our economy would buckle. The government would have to pay higher interest to fund its activities, and they would either have to cut spending in certain areas (I doubt they go this route) or create money out of thin air to pay the bills. Both of those scenarios are counterproductive to GDP. If spending is cut, this will shrink the economy, and if the USD is debased to pay for an ever-growing and out of control interest expense, that seems like the end-game. Therefore, the point is, I highly doubt we see much higher interest rates any time soon. However, if we do, silver and gold would skyrocket if the economy comes under extreme pressure.

On the other hand, if the government can find some way to increase interest rates to the point that holding gold or real assets is no longer worthwhile, the gold/silver market would collapse. I just do not see this as very likely. I need to better understand what Volcker did in the 70s/80s.

The curious thought that comes to mind is what were gold/silver prices in the JPY during the last 20 years. Oddly enough, real interest rates did not seem to cause gold to obscenely skyrocket there. This appears to have been a development over the last 10-12 years. This is food for thought, certainly... perhaps the only reason people are buying gold and silver is fear. However, another possibility is that the Japanese merely bought more U.S. dollars rather than gold, because it was available and certainly more liquid than gold or silver. I will side with this theory.

My guess? Inflation is working its way into energy and stocks right now. Everyone seems to think that bonds are on the verge of a major trend change. If everyone begins to see $$$ in stocks, perhaps they will kick their bonds to the curb, and if that happens, does that mean higher interest rates? I cannot answer this. I need to study more history surrounding government bond collapses. It seems to me the government has a resilient ability to buy its own bonds and keep rates low. I do not see the final red line to be crossed.

I would guess inflation will jack up stocks and energy, and we will get back into a stagflation state where energy costs are counterproductive to growth. We will probably hover at the breaking point for a while, and then government policies will probably mess everything up and send the markets into a sharp retracement.

The fear factor will wane, initially, while everything seems to be peachy (i.e. before exhaustive energy costs). Therefore, gold and silver may not do well initially, but eventually, when everyone is exasperated with high energy costs (etc.), the economy will reverse, and fear will reenter in prevalence. This will likely cause gold and silver to jump much higher, in the end.

------------------

Curious if anyone has comments. I enjoy dialoging on these topics.

[Maxismydog]

Haha. Well it can certainly go on much longer. You h e to wonder when the default will come. Our deficit with GAAP is around 7 trillion. Sure there are 2 ways to default, but I find it most laughable that there are still those that deny a very serious reduction in the standard of living is coming.

If another country begins first, the USD could become the safe haven again, prolonging the dance of death.

[mudslog]

I have been dollar cost averaging the past few years. Yes, we are similar to Japan on the surface, but there are several variables that are different which could be game changers. Unlike the Yen, oil is denominated in dollars...worldwide. Thus, things like inflation can have a much more dramatic effect which can result in bonds changing dramatically. Right now, we are seeing a type of inflation in the stock market. Simply put, there are to many dollars chasing too few stocks which results in price appreciation. In the general economy, we have "hidden" inflation. Your candy bars are getting smaller, more air in your chip bag etc. while the prices remain generally the same. That can only go on for so long.

[Maxismydog]

There is further downside risk, and then we win.

[Maxismydog]

Yes, you can be killed shorting, but sooner or later the charade has to end. It's playing with fire, but the one to time it right will do very well.

[Gregory_]

If one could predict the eventual collapse of the bond market, they could position investments well. This seems difficult considering Japan has been playing a similar government bond buying game for multiple decades without collapse.

I heard somewhere (Puplava's radio show?) that 70% of our treasuries are purchased by our government. How would one confirm this?

If the government is buying most of the bonds, this would explain low interest rates.

It seems these are the sources of treasury buying:
-=1.) Our government <-- 70%?
-=2.) Banks (borrow from the Fed and then carry trade off of the treasuries for an easy buck)
-=3.) Foreign entities/governments (slowing down?)
-=4.) Private individuals

I suppose 1 and 2 are the largest source. It seems highly unlikely that 1 will diminish any time soon, and this seems to have carried Japan for multiple decades. Therefore, one could expect low interest rates to continue for multiple decades here. This would mean shorting the bond market is a BAD idea. However, Jim Rogers is doing it as of a couple of weeks ago (listen to latest Puplava interview with him).

#2 will not diminish as long as they can make easy money (as long as they can borrow for less than the treasuries pay).

#3 and #4, I contend, simply do not matter in the face of the immense buying from #1 and #2.

Any thoughts?

[Alydyr]

I'm actively trading this. Pre and post split.

Down a little right now.

Good luck.

[The Claw]

After that Fed announcement we really have a huge winner here. This thing could go through the roof. Check out my chart from today.

[The Claw]

This is looking pretty damn good today guys I do not know if you have seen it or not yet but the BId is up 60.89

[mudslog]

Buy with dollar cost averaging. It will happen overnight. It may take years, but it will happen. If you get old, put it in a trust for your loved ones. We have a bunch of idiots.

[Crusader]

Question: if the FED. buys bank's bonds,

making fewer long bonds available to the market, does that make bonds more valuable- driving rates down on the long end??

http://www.cnbc.com/id/100296162

See last few paragraphs of linked article!

[Crusader]

Yep, they either buy MBS or print money,

to continue buying the long end of the treasury curve.

My bet is they buy Mortage Backed Securities and let long rates rise.

Sounds better than huge inflation from printing even more money out of thin air, even if that would be good for SLV AND GLD bugs.

Thanks for reposting the Break Out link that I sent you earlier. It needed more promanence.

[SilverSurfer]

End of Operation Twist, or the Start of QE4

http://finance.yahoo.com/blogs/breakout/fed-finale-end-operation-twist-start-qe4-183055950.html

[Crusader]

Haven't you heard?

This time it will be different.

Operation Twist is not likely to be replaced in 3 weeks, because the FED is having trouble selling short term to buy long end. The market is becoming too distorted and illiquid. Even the FED is going to drop this pop fly ball.

http://finance.yahoo.com/blogs/breakout/fed-finale-end-operation-twist-start-qe4-183055950.html

[Crusader]

Things are looking up here,

2013 is shaping up to be a stronger economic year in North America than expected.

[The Claw]

I have to agree I now that I am new here but this is one bullish looking chart. IMO

[SilverSurfer]

heard that !

Plenty of times before,,, wha dif now? tia

[Crusader]

TBT chart is looking bullish!

We are close to a rally, IMHO.

[Crusader]

Hold 12 to 24 weeks as rates go up

...On the long end of the yield curve.

But for the decay of the derivatives, could hold for 12 to 24 months. Bonds are the biggest bubble in decades, eclipsing even the real estate bubble.

Just need to time it right, like YCS.

[shotcallers]

When you say long term what is your target

[Crusader]

Tempting to buy TBT with 1.62% 10year,

if it hits 1.60 or lower ten year rate, I will scale into TBT as long term hold.

This will happen just before Fiscal Cliff resolution.

[12thman]

I'm short TBT with puts right now as a hedge to my long call positions in silver and gulp, a big crooked bank stock, and mining stocks... Eventually we go up infinity with TBT when bonds crash, just not yet in my opinion.

[Crusader]

Regression to the mean...

TBT wants to go up for another visit to $63, IMHO.

[SilverSurfer]

supports

[Crusader]

Good day for TBT,

It's time is near.

[flemsnopes]

Important Consumer Notice:
Our Current Central Bank Model does not offer brakes as an option.

The Scourge Of Central Banking
http://seekingalpha.com/article/903891-the-scourge-of-central-banking

[SilverSurfer]

"Honesty is the most important thing and if you can fake that,,, you've got it made" "Here's to Honor - Get on'r and stay on'r" Bill Clinton

[flemsnopes]

Ben Bernanke's least favorite quote.

"You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time". Abraham Lincoln (attributed)