US Treasury Bonds Soar on the News of Their Own Downgrade?

Anyone who’s been seriously securities pricing over the last several years has seen a series of bizarre pricing anomalies in securities as markets have gone from boom to bust- back and forth. Taken individually, any of these pricing anomalies as the market moves would be a challenge to Efficient Market Hypothesis (EMH) notion that the current price of a security reflects the most current analysis of information regarding that security. EMH proponents have a hard time explaining the internet bubble, or really any security that seems to defy rational explanation.

Still, people put stock in the pricing mechanism of the marketplace and see some wisdom in it. When gold was languishing in comparison to the US Dollar through the 1980s and 90s, the rational explanation was that people no longer felt it was a safe haven. Now, conspiracy minded Libertarians such as myself felt that there was a greater conspiracy at work on the part of the powers that be to get people to believe in the US Dollar as the ultimate safe haven rather than gold. There are certain strange coincidences, such as the decline of the spot price of gold in the wake of most major political news (such as the start of Desert Storm or 9/11) which would be occasions where you would thing it would go up.
Continue reading US Treasury Bonds Soar on the News of Their Own Downgrade?

Stock Alert: Time to Shove All-In on Barrick Gold

The Stock Market is full of strangely priced equities. The things that most often make the news are the stocks that are trading far above any rational price. With most banks offering interest rates on savings far less than the government’s own rate of inflation (with a “real” return of -4% or so) you would think that hot money would be flooding into the stock market in search of bargains. So stocks like Barrick Gold (ticker symbol: ABX) and the other gold miners has been an ever increasing mystery to me.
Continue reading Stock Alert: Time to Shove All-In on Barrick Gold