May 4, 2009 – On April 15th traders covered at 123-38/64 the Jun’09 T-note sold short at 125-20/64 on March 18th. The profit was 1-46/64.
I would like to get short again. The contract has moved lower since we were stopped out, but is I think due for a bounce. The yield on the T-note ended Friday at 3.15%, which is at the upper end of resistance. So some pullback in yield (i.e., a bounce in prices) can be expected. I therefore recommend selling short the Jun’09 T-note contract on the first close above 123-00. Stop-out this trade if this contract subsequently closes more than 1-00 point above your selling price.
I have been noting in recent letters that the odds have been improving that December’s top in the price of long-term US government debt instruments is their final peak. With each passing day, that top looks more and more certain.
Buyers of long-term government paper are focusing on the coming reflation, which is poised to be a tidal wave, given the policies of the Federal Reserve to rapidly increase the quantity of dollars it is creating. Higher long-term interest rates will of course further deepen this country’s economic woes.
My objective is to share with you my views on gold, which in recent decades has become one of the world’s most misunderstood asset classes. This low level of knowledge about gold creates a wonderful opportunity and competitive edge to everyone who truly understands gold and money.
