Monday, November 29, 2004

The Right Shoulder

of the larger head and shoulders pattern of the 30 year US bonds was completed today with a large down move of about 1.06 which brought the price down to the neckline of the head and shoulders. That was fast! :
The confirmation of the head and shoulders pattern is when the price of the bonds go below the neckline.

It's estimated that a third of American house "owners" have variable rate mortgages. A point or two increase in their interest rates can make most of them loose their houses since some huge percentage of Americans are in debt to virtually their limits. Most variable rate mortgages were taken out in the last couple of years with interest rates at 40-45 year lows. Not such a smart thing to do when you know you are going to have debt for many years and do not lock in low interest rates for the long run. Funny, but the US federal government is doing the same thing. They haven't issued any new 30 year bonds for a fair number of years now. It's insanity when you think about it. Anyways, it's normal for interest rates to be rising with rising gold and silver prices. That makes sense since the dollar is being trashed by too many being created out of thin air. People loaning dollars will be getting back dollars that have less value than when they loaned them. So they want higher interest rates to be compensated for the decreasing value of the dollars that they are going to be paid back with. Since the USD is losing value, more of them will be demanded to buy gold, silver and a huge number of other things. Or, in other words, since the supply of dollars is increasing, therefore devaluing the dollars, more of them will be demanded for the usual stuff we buy. Of course this wouldn't be possible if we did not have the Federal Reserve central bank. After all, primarily its job is to create "money" out of thin air with the same affect counterfeiting has on the value of the dollar. No wonder it's unconstitutional.

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