In an admittedly difficult piece to follow (BUT WELL WORTH THE EFFORT) Antal Fekete shows that as interest rates go down the capital to retire past (or previously existing) debt rises.

He makes one assumption that "total debt is or is equal to perpetual debt." That is the only possible hole I can see in his work...and personally I don't see the U.S. ever paying back its debt in today's dollars so in my view his work is solid.

http://www.safehaven.com/article-125...

If you follow through his logic, predictable cuts in interest rates invite speculators to buy bonds safe in the knowledge that the government will continue to cut rates and increase the price of the bonds they are holding. Once the bonds reach zero percent however the game is over and the speculators will look to unload them.

In my opinion, once the bond market turns markedly negative (or has a massive sell-off which China is asking for guarantees against) the last financial safe haven gold will shine. If the bond market suffers a rout; gold will go to the moon as the U.S. currency will effectively be destroyed.

P.