Keep Watching The Bond Market

Tue, Mar 20, 2012 - 11:21am

The past week has seen some rather sharp selloffs in the U.S. treasury market. Is "Operation Twist" failing? Will we soon see a resumption of overt quantitative easing?

Diligent Turdites will recall that we've been discussing this possibility for months. For me, the key to correctly anticipating the resumption of overt QE is found in watching movements of long-term interest rates. As often stated here, The Federal Reserve cannot allow interest rates to rise. Keeping rates low and funding the federal budget deficit are the two, primary goals of quantitative easing. Therefore, dropping bond prices (higher interest rates) signal that more QE (Fed buying on bonds) is necessary.

Well, what to make of these charts? We know from reviewing the long-term charts of the 10-year and the Long Bond that previous drops in price preceded the announcement of QE1 and QE2. We're almost there again. The 10-year is now perched precariously above the all-important 127.50 level and the Long Bond just had it's initial test-and-hold of support at 135. Note that, prior to these latest drops, the bond and the note had been in rather tight ranges since the Fed began "Operation Twist" in September of last year.

With bond prices being near these critical levels and having gotten there so quickly, we almost have to expect a rally here. The question then becomes: What happens next? I'd expect 127.50 and 135 to hold for a while longer but, if those levels fail, QE3 should be right around the corner. Already, there are some folks out there who think that The Fed will announce QE3 in April or June. If rates keep rising, those pundits will be proven correct.

The current beatdown in the metals began inexplicably last evening. Whenever you see gold drop seven or eight bucks, out of the blue, on no news, at 9:00 pm EST, you know that a raid is coming. Lo and behold...we got one. Gold reached all the way down to $1640 overnight and silver touched $32. That the selloffs ended there should be no surprise to anyone as those are currently our two main, short-term support levels. For now, the pressure is off but there's really no reason to get excited just yet. The metals remain in their recent ranges. Gold between $1640 and $1670, silver between $32 and $33. Once the metals pop UP and out of those ranges, the bottoms will be set and we can begin to get excited again. Until then, I'm waiting patiently just in case one more leg down toward $1625 and $31 develops.

I hope you have a fun and stress-free Tuesday. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Mar 20, 2012 - 8:34pm

@ Katie Rose

I just grabbed the first link that came up from my search, but you might want to check out growing lavender as a cash crop.

Turdle GG
Mar 20, 2012 - 8:45pm


is very poor around here

Mar 20, 2012 - 8:45pm

Turd mentioned Bond prices to

So does recent Schiff/ This may calm your nerves a bit Canine

Don't believe the hype -- the U.S economy is not recovering, it's getting sicker.
Number 47
Mar 20, 2012 - 8:47pm

@katie rose

Fresh herbs on a local scale are great for smaller farms, selling to local restaurants, local cheese makers and other small food producers, (butchers, bakeries etc) are all in need of supply. Also sell well at farmers markets. They are also very easy to grow.

Worth looking into. I read somewhere it can yield around $12,000 per acre.

Mar 20, 2012 - 8:51pm

iPad Heat

Part of my job is programming graphics. There's a special graphics processing unit (GPU) chip on board almost every modern computing platform (PCs, notebooks, iPhones, iPads...) for 3D Graphics. Almost all games use it. Like a CPU, when a GPU gets used it gets hot. Have you ever put a new NVidia or AMD card in a PC? That card has a BIG ASS FAN on it. If Apple has put a better GPU in the iPAD, it's probably going to run hotter. If you're not running a game, it probably isn't even noticeable. Take my Macbook Pro -- I generally have it on my lap and for surfing the web, reading email, etc... it's just barely warm. But, start up a game, ... look out! Sometimes I have to take if off my lap it gets so hot. It just goes with the territory. I doubt Apple could do much about it other than not step up the GPU for its shiny new iPAD 3 -- pretty much a non-starter. Games drive demand for all these platforms like you wouldn't believe...

Back on topic: I too have stopped buying PMs. But, it never was my intention of going "all in". Just enough to where I could sleep easier at night.

Mar 20, 2012 - 8:52pm


Pretty obvious isn't it? I wonder why.

33 and a turd
Mar 20, 2012 - 8:54pm
Mar 20, 2012 - 8:56pm

I don't understand


i don't understand, how the FED could explain QE3 if the equity market is that high and the economic conditions improving.

LifeIsPain cwavec
Mar 20, 2012 - 9:01pm

RE: You are Being Watched!

Any idea of why they were after you? Had you made an Ebay purchase around that time? While I can see why they might have an FDA agent, why in the hell would they have Homeland Security there (that's a rhetorical question)? Having been the subject of a bogus government interrogation myself I know how frightening it can be. I still obsess about it nearly a year later.

SRSrocco TheGoodDoctor
Mar 20, 2012 - 9:01pm



What happens to foreign companies in Mexico when the Dollar dies? We have never been in these shoes before, so there is no historical example to compare. I thought at one time, Gold and Silver mines in many countries such as those in South America will be NATIONALIZED when things fall apart. Now, I believe many countries local citizens don't want the mines in the first place. They rather have their land, clean water and peace and quiet than all the mess that a huge OPEN-PIT mine produces.

GoldCorp's Penasquito mine is dealing with a lot of issues with the local people. Check out this article:

Project of Mass Destruction: Goldcorp's Peñasquito Mine in Mexico

Five years ago, a new neighbor arrived in Mazapil promising employment, medical services and general development for the peasant communities of Cedros, Las Palmas, and El Vergel, among others. Unfortunately, the new neighbor has failed to deliver and hope for a brighter future has dimmed among the locals. In fact, the new neighbor, Goldcorp’s Peñasquito Mine, has turned out to be a very troublesome addition to the community as its main contributions involve environmental contamination and guzzling of the scarce water sources.


The article is worth a read as it shows the wonderful world of OPEN-PIT mining and all the nasty side-effects that goes along with this sort of activity.

WHITEY'S RULE OF THUMB: Best to do this sort of mining in a poor area where the people are believed to be TOO STUPID, TOO HUMBLE or TOO MEEK to put up much of a resistance.

Dracula Katie Rose
Mar 20, 2012 - 9:12pm

Re: I've stopped stacking for awhile...

Katie, I am sure that with your farm you will be A LOT better than most of us... :(

We will use our coins to buy cheese from you :)

Mar 20, 2012 - 9:15pm

Gauging the mood

The last time i saw such a consensus among Turdites was late February, the mood was very good here and the vast majority were looking for broad sunlit uplands. I considered at the time that if i had learned anything from my listening to experts that i rate as being reliable, it was that when everyone around is excited, i should probably sell some of my shares in the miners. I will do that tomorrow i thought. The next day was the 29th of February, i had the right idea but wrong timing. I can`t help but think that with the mood so dark at present in Turdville, i should be thinking of buying tomorrow. I`m not going to but let`s hope i have bad timing again, i have an excellent record of poor decision making.

Mar 20, 2012 - 9:19pm

Do you think you're being watched?

Keeping it lite...

Napoleon XIV: 'They're coming to take me away'
Mar 20, 2012 - 9:27pm

@Stock Canines


First of all Welcome to the Forum and Thank You for your very well thought out first post.

You are wise to head the words of elders, I have my entire life. And with the benefit of their wisdom imparted onto me, along with a Very Healthy Dose of situational awareness, I have been blessed with an incredible life.

Situations and Events change, The Elders know what worked for them in their time and their situation. It is always wise to keep an open mind to changing environments and times. Taking lessons from Elders and from your own acquired knowledge of the times in which you are trying to prosper, and working them together will benefit you and your loved ones greatly.

Being stuck in one pattern of thought, and not allowing yourself to change gears with what is going on around you does not benefit anyone.

If there is anything I have learned being very interested in history since childhood is

History does not repeat itself exactly, But it Darn Sure Rhymes

Mar 20, 2012 - 9:42pm

Takin a break

Great minds think alike! I, too, am feeling especially nervous lately. I have been redirecting my purchases to the things on my "SHTF list" that I don't have possession of yet. Will be doubling the size of my food producing efforts this spring. I have been very nervous lately that things are going to take a radical turn for the worse very soon. Have a feeling that once winter is over and the nice weather returns, things are going to get VERY ugly. I am seeing people everywhere getting cranky and exhausted from worry. Me thinks the damn will break soon.

Mar 20, 2012 - 9:48pm

Bond Market

Turd is so right on, never take your eyes off the bond market, the ultimate indicator of things to come.

cliff 567
Mar 20, 2012 - 9:50pm


America, as it was founded – as it was meant to be – not the perverted mess it has become - was the arch capitulation of an EE. America in 1776 was the proverbial Silver Eagle shoved in the face of a smug, controlling Power That Be.

​Bring it Brother, your voice has a true ring of history to my mind's eye.

Mar 20, 2012 - 10:02pm

Some stop stacking...

Some never stacked. Some are waiting for a prescribed, timed bottom to stack. Some plan to stack but never do. Some think stacking is an arcane idea and some have no idea what stacking implies or the causes that necessitate it. Such is life on earth.

Katie Rose, you have the right idea and it sounds like the right family that can discuss these things in a strategic way. You've laid out enough of your situation on here to cause me to think that you are doing the right and good thing. Seeds, yes. Garden prep, yes and your observations of what is going on around you is sound.

Everyone is in a different circumstance, financially, geographically, emotionally, physically, spiritually, years under the belt and so on. Add to that, lifestyle needs (usually desires conflict with needs), life experience, outlook of the future, priorities, family well-being, protection, survival instincts and threshold of pain or discomfort or inconvenience... along with many other factors. One size certainly does not fit all.

But you, Katie, are an inspiration. You are thinking right and I hope that you and your family ride through the tribulations and are protected by your love, faith and works.

Besides, contrary to popular opinion among pm "bugs" (like me), the metals are for the aftermath of the first wave of the mess we're headed into. Not a get rich, lottery ticket. But as with most all things... moderation is key. Taking care of the essentials of life are far more important than riches, whether they come from oil, gold, silver or Apple.

Turdle GG
Mar 20, 2012 - 10:13pm


No matter how often one experiences it, lower prices are a drain on morale (and account balances).

One approach that can be used is to change the "measuring stick" of one's personal wealth from $ to ounces.

I have not made that change completely, but use a hybrid approach, so I measure my net worth as:

net worth = x $ + y ounces of gold

Previously, I measured it like this:

net worth = x $

(I include the $ amount of my silver and stocks in the $ column. The only thing I don't account for in $ is the ounces of gold in my personal possession, due to my belief that physical gold is a different currency, or an insurance contract, or some combination of the two)

Mar 20, 2012 - 10:24pm

Bernanke testimony leaked

Apparently fox business got a hold of it Bernanke's written testimony 17hrs prior. It has not now been posted on the fed site.

Mar 20, 2012 - 10:37pm


The wife says you have no friends :-(


Mar 20, 2012 - 10:40pm

Only one reason...

i can think of against buying hand over fist right now.......and that would be a stock market correction creating a PM down draft.......otherwise this is a gift. I cant help but think many here are expecting a get rich quick scheme. Thank God for the wealth effect, without it we might be priced out right now by the populous looking for returns....and crowding the PM market. any other investment with:

a) fundamental strength

b) no counter-party risk

c) potential upside/downside ratio

that gold/silver are offering right now

.........i'm serious, if i'm missing that investment.....let me know what it is, because other than PM's...all i see is theft.

Mar 20, 2012 - 10:41pm

33 and a turd

ARRGGGHH! Just lost my post before hitting save. I'll try again.

Thanks for posting the link to Gerald Celente's interview on RT today. I know some people grumbled earlier today about getting tired of Mr. C. but I have been listening to his interviews and pod casts for several years and always enjoy them. A few years ago when he was on a radio talk show and was talking about the shameless tirade from Treasury Secretary Henry Paulson to convince congress to pass the $700 billion bank bailout bill or risk martial law. Mr. Celente referred to him as "Hank 'Frankenstein' Paulson". That just cracked me up. What a fitting description of the man! I still chuckle when I think of that.

I must say that I was secretly pleased when I heard Mr. Celente was one of the customers of M.F. Global who had his account stolen. I was pleased because I had the feeling (which has been confirmed since that time) that he would NOT let this issue die down. I knew he would pound the table about the corruption on every podcast, radio, and talk show he was on. The man is nothing if not dogged. He has called out almost everyone involved (Corzine, Gensler, Duffy, to name a few) time and time again. Even though some people have gotten tired of hearing his tirades, I am grateful to him. The man has both the opportunity and the persistence to keep this situation from falling by the wayside. I say "Keep it up, Gerald!!!"

Mar 20, 2012 - 10:47pm

Porcineograph – Pigatha in 1876

Porcineograph – The USA as a Pig, 1876

Full title of map: “THIS PORCINEOGRAPH is copied from the Census Surveys of 1870, adding only 3 feet of territory (?) resting on Cuba, Mexico and Sandwich Islands, and the Hydro-Cephalus from Canada. Congressional Legislation is required to PERFECT this GEHOGRAPHY.” “The familiar shape of America’s 48 contiguous states is shadowed by the silhouette of a trotting porker. The bristles on its back peek out over the long, straight border with Canada. Maine figures as its eastbound snout, its right eye is placed between Lakes Erie and Ontario to coincide with the Niagara Falls & Cataract (2). A giant pig’s ear covers much of Michigan and Wisconsin, in imitation of the Great Lakes. Two legs of the continent-sized beast are coterminous with actual geographic features: its right front leg, raised, is the Florida peninsula, its right back leg, touching putative ground, is Baja California, the Mexican peninsula. An imaginary left back leg is reaching across the Pacific to step on the islands of Hawaii, or, as they were then also commonly referred to, the Sandwich Islands (bacon sandwiches, by the look of these). Its imaginary front left companion rests on a sausage-shaped Cuba (3). The state of Washington has sprouted a bristly, curly tail wrapped around Alasqueue. The pig’s feet on Cuba, Baja and Hawaii account for the three added ‘feet’ of territory mentioned in the title. The claim on Cuba is justified by the (southern) US’s Spanish legacy, the extension towards Hawaii simply by America’s Pacific reach. The justification for the appropriation of Baja is, rather cryptically: Cast not thy (Mexican) pearls before swine least (sic) they tread them under their feet. Not all the entities shown here were states at this time; some were still territories, a few still had to acquire their final borders: the Dakotas were still Siamese twins, and Arizona and Wyoming were still to lose western bits of their territories to Nevada and Idaho, respectively.”

Click link and click/scroll image for closer inspection. This is pretty detailed.

Stock_Canines birons
Mar 20, 2012 - 11:02pm

Key takeaway

"were the situation in Europe to take a severe turn for the worse, the U.S. financial sector likely would have to contend not only with problems stemming from its direct European exposures, but also with an array of broader market movements, including declines in global equity prices, increased credit costs, and reduced availability of funding."

Perhaps the excuse for more printing once Europe shows greater weakness

Mar 20, 2012 - 11:03pm

Guys I know it seems glum out

Guys I know it seems glum out their. Watching the EE smash every hint of a breakout for three months. Regulators acting like Colonel Klink. London 3PM smacks like clockwork. Page being bought out. Threats of war doing nothing. Greek defaults do nothing.

I too am getting a little weary of the BS. I have bought on dips for so long I just continue on. Bought 22 ASEs today at $688, a price I have not seen in a long while and I really was not wanting to buy anymore this month. Lots of people seem to be capitulating. I guess that's what gives me the courage to keep buying now. This to shall pass maybe after this dang election is over I don't know. I am so sick of the feds thumb in every stinkin market. The control freaks do not seem to grasp the distrust they are causing that will take decades to repair.

Turd is right these bond markets are acting strange of late even with OP twist suppressing them. It could get out of hand fast and they will have to print if it does. Hang tough guys it looks to me that the comex is living day to day. 300k ounces came in the front door today and they finally settle an exact same amount of ounces on deliveries for the month after skipping several days. Something will give to shake things up, it always does.

Turdle GG
Mar 20, 2012 - 11:05pm

Stock Canines

yep, Ben is telling everyone that he has his finger on the trigger, ready to print.

S&P 500 futures are up, USD down.

Mar 20, 2012 - 11:09pm

the qe ,

you know ....Even if an overt QE takes place, with the way the positive fundos aren't working now why would they work later ? I mean seriously what has been historically been positive for PMs these days have been just the oppposite. Recently we have seen the POSX drop .50 plus in a day and the metals go down 5$. All BS

Mar 20, 2012 - 11:10pm


Good to see people quitting facebook, I also quit a while ago and have never regretted it. I have also cut down almost all my use of google too.

Turdle GG
Mar 20, 2012 - 11:12pm

Deciphering Ben's last paragraph

For our part, the Federal Reserve will continue to monitor the situation closely [PPT will not be taking any vacation days], work with our financial institutions [i.e. take JP Morgan's orders] and foreign counterparts [i.e. JP Morgan London office] to enhance the resilience of our financial system [we don't call them too big to fail for nothing], and be ready to use our tools [we have one tool, called a printer] to help stabilize U.S. markets [equity markets won't fall] should the situation require such action.

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