The most recent example of the bond bubble's speculative euphoria are the 50 year government bond sales in Europe. Martin Armstrong wonders if this insanity finally signals the top;
"If there was ever any question that this is a bond bubble with a
5,000-year low in interest rates, the final bit of insanity just took
place. Italy managed to sell its first 50-year bond last week as
investors were betting that the European Central Bank might soon add
ultra-long debt to its asset-purchase stimulus scheme. Draghi has said
he would do whatever it takes to stimulate inflation. Hence, speculators
are betting they can sell these 50-year Italian bonds to the ECB for a
profit.
The speculation was so great that about 16.5 billion euros in orders
were received for a bond issue that was about 20% of that amount. They
are not considering the risk that the upcoming referendum might
overthrow Italy’s prime minister. This is speculation gone completely
mad. These insane speculators have already bought 50-year bonds from
Belgium, France, and Spain as well. Many of these same speculators have
also signed up for Ireland’s 100-year bond in March."
Hi Tuna,
ReplyDeleteI know this is off-topic, but do you think it is a good time to buy gold with the recent pull-back? Or do you think it has potential to drop further? Jim Rickards is predicting a rate-hike in December - he is usually right.
Very interested in your opinion...I know you are a busy man these days(congrats btw!)
Thanks.
I think it's a good idea for investors to hold 10% of their wealth in precious metals. If you are more risk adverse I would hold more silver and gold mining shares in that basket. If something goes wrong in the world you will be happy you have that 10% insurance policy. If nothing ever goes wrong again in our lifetime you'll still have 90% of your assets in other areas. Do I think gold has the potential to drop further in the short term? Definitely. You should then purchase more to bring your portfolio total back up to 10% of your total assets.
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