Doug Casey Warns: “Sell All Your Bonds” As Global Bubble Collapses

December 16, 2016 8:05am NYSE:AGG

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Venerable market analyst Doug Casey recently issued a major warning to bond investors, noting that the global bond bubble, which is the largest in history, is about to collapse.


From The Casey Report:

Bonds—With bonds, we’re at the peak of the biggest financial bubble in world history. This is a very big deal.

Interest rates move in very long cycles. They went up from the mid-1940s to the early ’80s, when long-term government bonds peaked at close to 16%, and T-Bills at over 16%. I thought they hit bottom years ago, but the cycle overshot.

My guess is that they’re headed up in earnest now. And Trump, as someone who understands business (even though he doesn’t understand economics), will likely (I think…) do what he can to send them higher. Why? He understands the country needs to save, to rebuild capital. And higher rates will encourage saving and discourage debt.

Casey goes on to point out the $20 trillion in U.S. government debt on its balance sheet, not to mention trillions more that doesn’t show up there. If rates do surge higher, debtors — including the Treasury — will find it very difficult to service it.

Because of this, Casey concludes: “What should you do? Sell all your bonds.”

The iShares Barclays Aggregate Bond Fund (NYSE:AGG) closed at $107.16 per share in Thursday, down $0.13 (-0.12%) and hitting new 52-week lows. Year-to-date, the largest bond ETF with over $40 billion in assets has fallen 0.79%.

AGG-2016-12-16


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