Randall Forsyth at Barrons online has an article about bear market rallies. It focuses on the wild swing that took place on Wednesday. These sharp rallies are one reason it can be difficult to trade on the short side.
In the immediate aftermath of the Fed emergency rate cut, Treasury bonds went up in price (lower in yields). Now that the news is being digested, bonds are coming back down. It is an interesting thought process to be buying 30 year bonds, yielding less than 5%. Those that are doing so, seem confident that inflation is unlikely to be a major problem. Today, precious metals are jumping, so these two sides seem at odds. The bond market is the much bigger fish as compared to precious metals markets. In most stare downs the bigger fish will each the smaller fish. It will be interesting to watch.
Readers may remember that I see the long bond as a bellwether that often leads other markets. The Federal Reserve pushes the noodle on long term interest rates with the Fed Funds and discount rate. Sometimes, the Fed gets painted into a corner, when the long bond yield goes up in the face of rate cuts. So far that isn't happening, so for now the Fed still has room to manuever.
3 comments:
Have a question - has anyone heard of Bullion Monarch Mining (BULM)? I have been looking at investing in gold stocks and this came up on my brokerage webpage. I don't mind some risk for gain and their assets look good but they don't seem to have made much of a mark on the stock scene. Any info you can share?
Magpie 27
HEY MAGIE, Bullion Monarch has been around for about 50 years or so. Its biggest drawback is its management which has treated this public company as a family resource, but then again, what do you expect of a moron run company out of Utah. It does have some good assets, somewhat like Royal Gold and should trade, if professionally run, somewhere about $10 - $15 dollars. But as long as the Morris family controls it don't expect it to break $5 at best. Right now, at less that a buck it is one of the best deals out there.
Charles D.
Magie, btw, BULM is having a stockholder's meeting in Vegas on Monday, the 28th and they anounced a stock buy-back of $1mil. but I doubt that will really happen. Funny to have morons in Vegas but not really, morons rule Nevada, in more ways than the obvious.
A Monday S/H meeting, good idea to keep any shareholders from attending. Folks should just withhold their Proxies and leave the Morris clan without a forum. Now that would be funny.
Charles D.
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