Bond Vigilantes -- Where Are They?

One Answer: Many are fleeing to gold.

Confidence in the US Dollar, and concomitant confidence in US Treasuries, may be reaching its limits.

The daily chart shown here of the 10 year US Treasury futures is showing net liquidations, both in prices and volume. The Klinger Volume indicator in the subgraph has turned red, indicating a net selling of treasury futures. This indicator is a very fine leading indicator, and almost always changes direction before a new trend begins.

More and more investors are buying gold (next chart), leading it to ever-higher prices on the back of greater demand. Note again that in this case, the Klinger Volume indicator is showing strong accumulative buying, as evidenced by the green line in the subgraph.

So who is buying treasuries, to keep interest rates so low? Read the articles below for the answer.

Here are some must-read articles on the interaction between the Fed, bonds, inflation, money supply, and interest rates. The term "bond vigilantes" was coined in an article by Dow Jones.

Bond Vigilantes Strike Back

Central Banker's Worst Nightmare - the Gold and Bond Vigilantes by Gary Dorsch, highly recommended. The sample chart above is from this great article.

Bond Vigilantes Pounce on Prices

US Economy Sliding Toward Stagflation, Bond Vigilantes Hooked on Gold

Bond Vigilantes Hooked on Gold

Gold Soars Into Orbit