2 votes

Anyone Short US Treasuries?

I'm not really sure how that works but it sure seems like there's nowhere for the prices of treasuries to go but down (inverse to interest rates that will eventually rise dramatically like they have in Greece).

I'm just wondering if you think this is the kind of investment that you'd actually see the pay off for or would there be a default and so you'd lose even though you correctly predicted the direction of the trade.

I'm also wondering if there would be a default whether it would be specific to US citizens. Basically I'm wondering if there would be a way to remove the default risk by shorting treasuries but doing so in another country (e.g. in a foreign stock exchange).

I apologize if my questions don't make sense since I'm not really sure about the risks associated w/ shorting treasuries.



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Understand the Two-Tier Fiat Money System

The point is to hold or increase wealth. Unlike sound money, fiat currencies often pretends to represent wealth that does not exist. Federal REserve Notes and US Treasuries are part of our two-tiered fiat currency system.

http://www.dailypaul.com/143702/single-and-dual-tier-fiat-mo...

An investor explains:
http://wealthcycles.com/visual-economy/fiat:-designed-to-fail-

Rothbard, Shostak and Salerno developed Austrian Money supply metrics.
http://mises.org/daily/4297#ixzz0ngydjBnE

Pollaro charts the results at his 'Contrarian Take' site.
http://blogs.forbes.com/michaelpollaro/austrian-money-supply/

http://www.dailypaul.com/134337/austrian-money-supply-metrics

Free includes debt-free!

Hell No

"I'm not really sure how that works but it sure seems like there's nowhere for the prices of treasuries to go but down"

Gary Schilling said this week in response to that same question, "They have been saying that for thirty years."

It is impossible to know when that time will be. The Bankers can keep this thing going for much longer that we can comprehend. When it comes down, they will be the only one's to know.

my advice

Shorting the treasury can pay off big, but the key is the time frame. The banks borrow from the Federal Reserve at 1% interest; good luck getting that interest rate from those same banks when you go to borrown on margin. It'll be more like 8-15%. The key is you have to be pretty sure that a precipitous fall in the bond value will happen in say a 1 year time frame. Otherwise the interest payment will just eat your gains anyway.

Also, if the bond falls because of interest rates going up, that's one thing. If the bond falls because the dollar falls off a cliff, that's entirely another. Because then when you borrow your bond on margin and then sell it, you can't sit there and hold dollars or any typical dollar-denominated stock. So you have to take those extra dollars and buy gold or Swiss bonds or something.

Fighting the Fed

The part about "a default and so you'd lose even though you correctly predicted the direction of the trade" does not make any sense.

The problem with shorting US Treasuries is that there is a eager buyer with unlimited money - namely the Fed. I tried it and I lost. Silly me.

At least I got out before the recent rally that took the 10 year down to 2%. Two per-freaking-cent on a ten year. Sheesh. But short positions are still near all time highs, so the danged thing could go even lower.

You can short Treasuries directly if you have a margin account. Otherwise there are ETF's. See PST and TBT. Or not.

Ĵīɣȩ Ɖåđşŏń

"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln

Don't make an investment where you don't understand the risks

Having said that, there are ETFs that aim to produce returns by going short (TBT) or long (TLT) on Treasury securities.

It is possible to sell Treasuries

in the futures markets. It is not the same as "shorting" in the equities markets. One simply enters a sell contract against a buy contract which is created at the same time for another player.

These are all netted out at the end of the day and you will see your profit or loss in your account after the daily settlement. Your sell contract will however remain in place until you close it out. You will have to deposit margin which is determined by the Exchange. The Chicago Mercantile Exchange (CME) has T Bill and T Bond markets. You could just call a futures broker and ask for their advice.

My advice would be to stay away from all paper markets and simply buy physical gold and silver. Whatever happens will happen very quickly and no-one who is in these markets will be prepared for it. You may be on the wrong side of a trade when it happens and then you will be wiped out. Best stay away.

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)

I am pretty sure shorting is fraud.

Why anyone would advocate fraud is beyond me.
Edit
I stand corrected. Naked short selling is illegal. *slap on the head

Isn't the FRB in the process of selling/buying short term?

“When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic.” – Dresden James