Despite gold's recent plunge, yesterday's auction tells you that the bond market remains extremely worried about inflation.
Yesterday's 30 year bond auction was a complete disaster:
My Take:
Folks, I can't even begin to describe how ugly this is. Before I get into this, let me preface this by saying that we could see a short term higher move in the dollar as a result of global fears around sovereign defaults forces capital into the US.
This would then possibly trigger a huge short covering rally of the US Dollar as a result of an over crowded short dollar trade. Many may interpret this to be very deflationary. I just don't see it longer term. In my eyes, the trend for the US dollar and our economy is heading only one way: DOWN!
The 30 year bond auction confirmed that the bond market sees nothing but further printing and dollar devaluation. The world's FCB's are basically telling you that they don't want to hold any long term investments in the US as long as our government continues to print. This eventually is going to force interest rates to move significantly higher in order to attract demand.
BTC
As you can see above, the BTC was a measly 2.448. CNBC's Rick Santelli gave this auction a big fat "F".
It's pretty simple folks:
The bond market is scared to death of inflation. I mean who wants to hold a 30 year bond at 4.5% when inflation could rise 10% a year as we power up the printing presses?
You must also assume that the bond market presumably expects the US to continue to spend themselves into oblivion. In my opinion, it becomes increasingly obvious that we cannot eliminate all of our debt without printing out of it.
Thursday's auction was very ominous: If we cannot sell our debt, the jig is up. In my eyes, this was a warning shot across the bow from the bond market.
Take a look at Jim Rogers' appearance on CNBC yesterday. His investment thesis continues to be focused around inflation:
Disclosure: No new holdings at the time of publishing.
