Value of the value of a bond, part 5

We've been looking at how much silver the government would have to give you every year for lending it $100 (for ten years). Remarkably, just a decade ago, the government gave you a silver eagle's worth of interest every year for your $100 loan. Now, all they'll give you is the paper equivalent of 1/20th oz., or about half the melt value of an old dime (i.e. circulating dimes when money was money).

For almost 10 years, the value of the 10-yr yield in silver traveled down a narrow channel in what could very well be a managed descent. Then, in 2010, the descent became even steeper (see purple channel). Back in May, I guessed that we'd go back to the top of the purple channel, which we did, and then we went back to the lower trend line, where we are now, after overshooting for a few days. The UST10Y looks to be in a descending wedge (orange lines in lower chart), which signals a steep fall, but how much lower could it go? Anyway, it will probably make its way towards the upper orange line first. But if it doesn't, and since the silver chart looks bullish, perhaps we are entering an even steeper phase of yield worthlessness, which might begin after the thin blue line proves to be resistance. Stay tuned.


hiptwist said...

Something completely different:

Would you please comment on the Zerohedge article as you have collected the historical bar numbers?

Warren James said...

Yeah, I was just looking at it...

Basic details: we have the last 45 bar list documents loaded in the database (every published document since 20th June 2011). The 'ZJ6752' bar does not appear in any of the GLD Documents (we don't have any records prior to 20th June).

It's very useful for us to know the year of the bar, as seen in the clip.

You'll be possibly unhappy to know (and you can tell the people on Zero Hedge all about it) that a Rand Refineries gold bar with the same serial number did show up in "MSL Gold" bar list ... specifically line #10590 of the "MSL Gold" worksheet from THIS file (ETF Securities) [link].

So no conspiracy, at this stage. This is interesting enough that I'll write something on it tonight.

Warren James said...

The fineness on the ZJ6752 ETF Securities bar is 0.9989 - tonight I'll see if I can magnify the video to confirm a match. Nice of them to show us the manufacture date (2009), that helps us as a reference point as we are trying to assign an approximate age to all the bars.

Warren James said...

Hi again Hiptwist, wasn't the intention to lump you in with the people on zero hedge (which might appear from what I wrote). The ZH article does have at least one valid point: the gold shown in the clip didn't belong to GLD (it belongs to another fund). For what it's worth, our historical data shows the bar being added (to ETF Securities) around the 20th July 2011.

I'll write this up. Regards, Warren

hiptwist said...

Nobody lumps me if I don't want to :-)
But thanks for the info so far!