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Message: Re: Do You See What I See?
3
Oct 08, 2008 12:01PM

Yes! Stone, this is a critical graph, your 5-day chart. We are starting to get some more divergence.



I want to point your attention to what I think is an even more critical chart:

http://finance.yahoo.com/q/bc?t=5d&a...

This is the DOW compared to the 10-year Treasury Bond yield. Frank Barbera discussed this yesterday in his column, but the point is this: typically, when the stock market plummets, investors run to bonds, thus driving the yield lower. HOWEVER, over the last two days, look at how they have diverged: bonds have been sold off. They have not acted as safe-havens over the last two days, despite the panic in the stock market.

It is still too early to tell if this trend is here to stay, but the long-time prediction of most economists I follow is that the downfall of the currency is going to come amidst RISING interest rates, as people flee bonds due to finally realizing that they are losing purchasing power through them.

At that point, when investors are fearful of the overall stock market, yet realize that bonds are even worse, will the gold market realize its true value as the only safe haven and explode.

Hysteria






Oct 08, 2008 12:38PM

Oct 08, 2008 02:30PM
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