"President Obama promised Governor Schwarzenegger enough TARP to keep California from being washed out to sea; gold and silver were up sharply this week, as were the yields on the US T-Bonds. The dollar was down. This is a double whammy for foreign holders of US Bonds.
Higher interest rates change everything! Real Estate, financial and money markets, as well as foreign interest in US assets are at risk if T-Bond yields continue to rise and the dollar fall. I suspect that many big players, those who over the years went along with US “policy makers” to get along in the US Markets, are now stuck with huge positions they would rather not have.
I hope these people lose all of their money in their Long T-Bonds & dollar / Short Gold trade. What they did was dishonest. They had the inside scoop from a contact in “policy central” that some market was going to have its honest shorts or longs run out of town and it was going to be so much fun and yadda, yadda, yadda. So now after a few years of excitement and making the big bucks, these guys are now stuck on the wrong side of the market.
No doubt these positions are all hedged. But so were Bear Stearns’ investments two summers ago. I expect another derivative fiasco when this house of cards falls. Everything needed for a financial panic is in place. All that is needed is a triggering event. President Obama making the case for bailing out the “un-named favored financial institutions” one more time might do it. Gold at $1100 might light the fuse. There are trillions of dollars out there. The dollar is multiplying like rats in a world with only so much gold and silver. The day is coming when holders of the precious metals or even oil will no longer trade what they have for US dollars if Washington doesn’t get control of itself."
By Mark J. Lundeen at http://www.gold-speculator.com/mark-lundeen/7055-bear-market-race-bottom-week-84-a.html
