Previously, I wrote that the bonds of Genworth Financial were a tempting buy. Looks like some of you took my advice, because that bond is now trading at $.975 on the dollar rather than the $.86 it had been when I wrote about it.
That’s a tidy 13% profit on your money in less than two weeks.
I know my brother took my advice. Whether he’s going to get me a decent Christmas gift, though, remains a mystery.
What this is a greater sign of is that the money that the central banks are pumping into the financial system is bringing yields down across the board. In fact, the yield on T-bills (that’s a four-week note) has reached zero. That some of that money is finding its way into bonds that yield significantly better than zero, suggests that we may be seeing an end to the credit crisis that reared its ugly head in October.
Bill Bonner of the Daily Reckoning has described it as the start of the next great bubble: government debt. He predicts that this one will burst as all the others have, and with far worse results for Americans, since it’s likely to take our currency down with it.
Meanwhile, those Genworth bonds were a good buy. I’d suggest people take the profits from them, once matured, and invest in something that will survive the collapsing of the dollar — like gold.