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Sunday, September 26, 2010

US Long Bonds Remain An "Enron-like" Train Wreck

Surging trend energy in bonds continues unabated since April 2010. REV(E), or trend energy, illustrates the strength of the surge. Trend energy as of August 2010 is approaching the all-time high in December 2008. This has been achieved while price remains roughly 20% below the all-time high. The divergence of trend energy with price only reinforces the power of the trend.

US Long Bonds ETF (TLT)


At some point capital flows based on reality economics will override the short-term illusion. The unusual change in the distribution of buyers at the Treasury auctions some developing cracks in the global economic facade. Besides, technical analysis based solely on nominal (US dollar) trends is extremely myopic and largely useless during periods of aggressive currency debasement. The real or unbiased currency adjusted trend in US long bonds remain an "Enron-like" train wreck that few are willing to acknowledge. The sad truth for the public is that capital flows require zero "official" recognition to force change.

Long-Term U.S. Government Bonds Total Return Index (LTGBTRI) to Gold Ratio:

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