"Safe Haven" Investing
From Chuck Butler's daily market commentary on 5/6/10. Chuck is Senior Market Strategist at Casey Research.

Speaking of Gold... You know earlier this week, I told you how Gold was moving close to $1,190... But then the trap door sprung, and the shiny metal fell hard... Was there any reason for this fall? NO! And if you're like me, you see this and think... "The price manipulators are back in the market"... I mean, to me, that price action smelled of price manipulation by the BIG BOYS in an attempt to make Gold look bad, while stocks were getting deep sixed... For... If investors are fleeing stocks, they need someplace to put their cash to work... And if Commodities, led by Gold, are getting deep sixed too, along with currencies, then the only place to go would be bonds... Oh, boy, give me some more of those "safe haven" bonds! NOT! But... That's what's happening folks... I told you yesterday that the 10-year Treasury saw a 10 BPS move in one day! That required a TON of purchasing to do that... And the Gold Manipulators just happen to be BIG BOND DEALERS... Hmmm, you don't think that they figured this all out ahead of time, and moved investors on purpose do you? OF COURSE I DO! And you should too!

The "good times" continue at the U.S. Treasury, as they announced that they will be auctioning $39 Billion of three-year notes on May 11. Next week’s sales will also include $25 Billion of 10-year debt on May 12 and $16 Billion in 30-year bonds the following day.

In doing my best Ace... How long has this been going on? Well... The answer to that is it has been going on a too long! And how long will it continue? Given the Gov't's budget for this year, this need to auction $80 Billion in Treasuries will continue for far too long!

And what will it eventually do to Treasuries? How about this... Have you ever heard of dilution? The Treasuries that already exist continue to be diluted by more Treasuries, making them worth less all the time... I've said this before on many occasions, but basically, if this continues, foreigners needed to buy the Treasuries, will begin to demand higher yields, to take on such risk... Higher yields means lower prices... Now, Treasuries don't look so inviting or like a safe haven do they?....

And... Just look over to Greece and Spain... Sure they are small potatoes when compared to the U.S. but, you can get an idea of what happens when your debt gets so big, and bond buyers no longer want your debt at current levels... Yields on Greek and Spanish Bonds are going through the roof in an attempt to attract buyers... If you don't think that can happen here in the U.S. then, well... Maybe you should go buy some "safe haven Treasuries" today...