Tuesday 2 November 2010

39.25 Year Bond and Gold Cycle

May 1775
August 1814
Late 1853
February 1893
June 1932
August 1971
November 2010 ?

These dates are all 39.25 years apart and are all starting points for rising bond yields ( falling bond prices ) and rising gold prices. In some cases the moves were quick and sudden in others, the dates were starting points for long trends.

May 1775.Boston occupied by British Troops.Start of the revolutionary War.Continental currency introduced.(which would become worthless) British Bond yields climb from 1775 to 1780 by over 2%. i.e. 3% to 5.3%

August 1814. Napoleonic War. Bullion convertibility is suspended. From that point the Rothschilds accumulate Gold and nearly corner the market and Consols collapse until Waterloo.

Late 1853. The low deflationary point in the depression leading up to civil war. Gold convertibility is suspended in 1857. By 1869 Gold has climbed from $19.37 to $162.4.

Feb 1893. Philadelphia and Reading Rail Road company collapses; start of the 1893-1897 depression. Gold leaves the USA and in order to buy it back the government issues high coupon bonds

June 1932. the low point in the Dow and the market starts "pricing in" the devaluation of the dollar against Gold. 1933 Gold revalued by 70 pct from $20.67 to $35.00 Government bonds start declining in mid 1932

August 1971. Breakdown of Bretton Woods. Gold soars from $35 to $873 in January 1980. Bonds decline for longer, not bottoming until 1981

November 2010. QE2 marks the point that printing money is not just to save the system but is an active central bank policy. Government bonds start declining,particularly in countries without a printing-press(but it may be a slow process in the US). Gold moves to $4.000 per ounce?



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