Today the 30 Year Treasury Bond Price bounced off of support after opening below it. The lows were rejected intraday and the price finished higher. I wouldn’t be surprised to see some consolidation here, maybe a short lived rally, but at the same time I expect these lows to be tested again. The bond market has been fragile ever since the Fed announced that it would give itself the role of propping the market up. A selloff of over 15 points since Jackson Hole (12 since Nov 3) is not something to be taken lightly. The US Treasury has a long standing reputation as the safest asset in the world. When that much confidence is lost in that short of time due to fears of the negative effects of QE, it signals that they are serious signs of unrest in the global marketplace.
The COT report came out today and the results may have had a hand in silver finishing higher on the day as another 1,514 short contracts were covered bringing the total to 57,398. Just a few months ago on the September 28th report, there were 73,075 commercial shorts. If this pace continues we’ll be seeing $40 silver by mid 2011.