The Dow rose 259 points. Gold was up $28.
But who cares? Up, down…up, down… Every day brings more ‘truth.’ But what we want is a truth with legs. We’re not day traders. Not week traders. Not even year traders. We want a long, sure…mega trend. We want the Dow at 900 in 1983. Or gold at 260 in 1998.
What is there today that is equivalent? How about 10-year US bonds at 2.20% yield? For upside, we can’t think of a single other thing. US bonds have been in a long, long uptrend — basically — since they’ve existed. From 1791 to the present, they’ve gone up. Of course, there have been some major problems along the way, notably in the ’70s when it looked like the Fed had lost control of inflation. Otherwise, bond yields have gone down as prices have gone up.
Is it time for a turnaround? Maybe not just yet. We’re still in a
Great Correction. Bonds should continue to go up — for a while. But just
wait…this is a truth that won’t go away: US debt is expanding…as its
ability to pay declines.