Zeev's Turnips Patch-No Politics (ZEEV)

[Frank Pembleton]

longdong_63 -- Jim Sinclair posted an observation I thought was pretty interesting:
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RE: The 5th Element Shows Signs of Emergence
From: Jim Sinclair
Date: Friday, October 4, 2002

As you know from my various postings, I have been focused in on the US dollar and the US Treasury Bond Market, looking for any sign that non-US holders of US Treasury Securities were becoming concerned over their profits being eroded by lower dollar levels.

Well, today was the first sign of that possibility as the stock market declined significantly in the first five hours of trading. Surprisingly, when the market was off considerably and showing no sign of recovery, the long-term US Treasury Bond Market was also in a decline. This is the first break in the multi-year profile of this market, which has been rising in tandem with every significant stock market sell-off. Today, US Treasury bonds, rather than rising, were falling as the stock market marched towards a Dow at minus 300.

What makes me focus on this phenomena was that there are rumors that the Exchange Stabilization Fund entered into the US dollar Forex cash markets to support the dollar as the Dow went minus 200. I am therefore of the mind that this reaction from Washington was a reaction to the beginning of a liquidation of US Treasury Bonds by non-US holders. We shall see?

However, all efforts to stop a dollar decline here, except in the shortest-term, are a waste of time & money because of the concomitant events of US Budget Deficit - US Trade Deficit - US Current Account Deficit and the dollar reaction. The bonds did rally on the rally in the US dollar as did the stock market.

Regardless, today, Friday, October 4th, should be noted as the first time the bond market fell out of its inverse relationship with the stock market since March of 2000. That would be right on time, if I am to be correct in my assumption that the 5th Element necessary for the fundamental conclusion that we are in a long-term gold bull market was to fall into the equation, which is a top in the bond market before the end of November 2002. Of course, I put out an exploratory short again on the 30-year bond with a 32/32 stop loss.

http://www.financialsense.com/metals/sinclair/general/vip.htm#1004