Are the bond bulls about to get steamrolled?

As the deflation rhetoric intensifies and scares the hell out of the gold community, it’s not hard to find a bond bull praising the virtues of fixed investments. Talk, however, is cheap. I prefer to follow the money.

Money flows suggest that the bond bulls and all their bravado are standing in front of oncoming steamroller. Connected money, huge bulls in April, has turned statistically bearish into strength.

US TBd (20 Years +) and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Retail money (also know as wrong way Charlie), huge bears in April, has turned statistically bullish into strength.

US TBd (20 Years +) and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest


Technically speaking, the up trend appears to have been broken. I will be watching US Long Bonds (TLT) for the completion of a distribution sequence known as a “Three Drives to a Top.”

US Long Bonds ETF (TLT)


What should be most concerning to the bond bulls is TIME. A predominate up cycle for bonds (decline in yields) is nearly over.

30-Year US Bond Yields:


As long as these trends persist, the bond bulls would be wise not to attempt to stand their ground to the oncoming steamroller backed by connected money. Now, those within the gold and stock community might be taking this analysis one step further and asking the next logic question. What does this mean for gold and stocks? I will leave that for discussion.

Jim's chart should serve to remind us all of the importance of US bonds (a proxy for US dollars).

Five Pillars of Gold: