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March 1, 2012



Do NOT think you are going to figure out the exact timing of when the move will start in earnest. Do not try.

Do not think “I will get on when I’m sure it’s on its way”. Lately, when markets finally crack, it seems to be with a giant start ($90-$100 down days in Gold for example), and by the time you are “sure”, Bonds could have ripped off 4 or 5 points in just a few days time…

Options have their drawbacks but their value is in not having to pick the exact moment when something will happen. I have been maintaining, and will continue to maintain, an attitude that can be summarized by, “I WILL NOT BE OUT”. In my feeble mind, I have zero doubt the Bond market is, much sooner than later, going to absolutely fall off a cliff.

With the caution these are my opinions, and that just because I believe this so strongly does NOT mean I will be right, I have told myself the following:

It is all math from here. They ARE going down. Supposing a MINIMUM move of 15 points, many options offer the possibility of 5+  times your money (or losing 100% of it if I am wrong).

Step 1. Own puts NOW.

Step 2. If those puts expire worthless, this means Bonds are still in the stratosphere. The odds of a major decline, to me, will have gone up dramatically. Buy more puts. STAY SHORT. Do NOT try to “time” this.

Step 3. When the move gets underway, do not get cute after 6 or 7 potentially quick points, and think something like, “It’s gonna bounce. I’ll get out now and get back in after it does jump back up some.” Just sit tight. Leave it alone.

That’s it. Relative to the potential, I think Bond puts are dirt cheap. With all the fairly decent calls I have made in this market during the past 30 years, I honestly believe this could be my easiest, and best, bond recommendation ever.

Just do it. REALLY.


(aka to many of you, and not without reason, Bond Dog)


Here is the current June 2012 Bond chart and then some examples of how Treasury Bonds do go down…


Some other approximate put option prices:

138 = $2100
137 = $1800
136 = $1500

And here are some historical looks at how they have declined in the past…





9-2-10dec05bonds - Copy.png







The next one is kind of the way we are looking now…like, after 6 months of consolidation, the current market is in the same place as this was when it was at 97, and ready to turn down 13 points over the next 3 ½ months…Only difference is, the current bond is trading at 142!!!





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