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December 22, 2009 / Jeb

Best Long Term Trade…Shorting Treasuries and Betting on Higher Interest Rates

As many countries are getting downgraded because of fear of default, the short treasury etf (TBT) is showing signs of strength.

It all began with Dubai needing to be bailed out and now further emphasized with the debt problems in Greece, the fear of government defaults coupled with some good economic news from the U.S. is causing a correction in gold and strength in the dollar.

Now the market is pricing in inflation and higher interest rates to come as governments will scramble to fight inflation and bad debt.

The best long term trade is betting on higher interest rates.   TBT shorts the long term treasuries.

The Federal Reserve has done everything it could to prevent a housing collapse.  The method they used was to artificially keep mortgage rates low.  As in any natural phenomenon when you suppress something it creates an opposite force opposed to it.  We are fighting the credit crisis with more and free credit.  It is only time before we face the crisis of the U.S. Government in trouble of defaulting.  Ponzi schemes don’t last forever.

Buy real money gold, silver, oil and food.

TBT shows two signs of support bouncing off the 50 day moving average.  It also shows a breakout of an inverse head and shoulders.

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