Skip to comments.US Sells 10-Year TIPS At Record Negative Yield
Posted on 03/24/2012 10:03:05 PM PDT by RC one
NEW YORK -(Dow Jones)- The U.S. government sold debt at a record low yield Thursday, as buyers accepted a negative payment for the second time in history on 10-year notes that shield them from the threat of inflation.
The $13 billion offering of 10-year Treasury Inflation Protected Securities, or TIPS, garnered decent interest. It drew a bid-to-cover ratio of 2.81, compared to a 2.74 average over the last six sales of the same kind.
Buyers accepted a negative 0.089% yield, reflecting their willingness to pay a premium to own U.S. government debt, perhaps on the belief that they will be compensated with rising inflation down the line. In January, the securities sold at a -0.046% yield.
TIPS are designed to protect buyers from the threat of rising prices. The value of these securities increases as the consumer price index moves higher. Inflation is a risk to bondholders because it erodes the value of their stream of fixed income over time.
Direct bidders, a group comprising domestic banks and fund managers, purchased 21.1% of the sale. This is higher than the 14.1% recent average. Indirect bidders, often a gauge of foreign interest, scooped up 40.4% versus their 36.8% average.
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CPI adjustment won’t protect these from inflation. They should be adjusted with the expansion of the money supply.
Looking back, how valid have the relative sales of TIPS been as an early warning of future inflation?
it seems like the big money powers are anticipating inflation. We are in uncharted waters currently. Looking backwards might not be useful.
you got it.
It is time to prepare to leave. How long have we?
We're 4 years into a decade of pain. No joke.
It’s time to by more gold and silver.
It’s time to buy more gold and silver.
You can’t eat gold or silver. Buy land; at least you can grow your own edibles.
you can’t run with land either but I agree, farm land can be an excellent investment all around.
Land is worth anything only as long as you are able to work it and most importantly defend it. Lacking that it's just a hole in the ground into which you throw money.
After TSHTF the price of land (that trades today for, say, a million dollars) will drop down to the cost of a few handgun rounds that the new owner needs to burn to remove previous owners. Why would anyone give you anything for land if they can simply take it? If you own 300 acres of pasture, can you defend it and your cattle? Can you even *know* if a trespassing gang has shot one of your cows and is loading it into the truck? If you do, how do you approach a gang in an open field? What if the gang brought 20 trucks and 100 soldiers to steal your entire herd? A single man, unless he is one of those movie heroes, has no chance of getting out of that alive, let alone saving the cattle.
Unfortunately investments for peaceful times and investments for TSHTF times are very different. When TSHTF the best currency is high-tech items that are hard to obtain in a destroyed society - such as medical supplies, ammo, weapons. Everything else - even food - is renewable and is better obtained when you need it, by trading one of those items. A suitcase full of drugs will be priceless.
IMO, holding US debt, TIPS or not, is not very valuable. The government can print as much of the money as it wants, and the same government tells you what the inflation rate is. In essence, you are buying a paper where the issuer is free to pay you whatever he wants.
The trick is to invest as if the time of peace is all upon us, but be ready to pull the roots out and reinvest into TSHTF commodities as soon as it becomes prudent. Needless to say, the longer you wait the less you can recover from your peace time investments; but if you wait too little then your TSHTF investments - which pay no interest - only take space in your basement, and their "use before" dates come closer and closer.
you can purchase 20 acres of farm land and lease it out to a farmer who will basically pay your property taxes and then manintain the land for you. And because God ain’t making anymore land, you can be reasonably sure that your land will appreciate especially in an inflationary environment. eventually you can sell it for profit. Since it’s real estate, you can shield yourself from any taxes that may result from the profit by using the 1031 exchange. Of course, it’s much easier to shield yourself from those taxes when you invest in physical gold/silver.
These might be a real bargain, depending upon the inflation adjustment limitations on the yields.
Don’t worry. The Fed Reserve will purchase them all anyway. They will print more electronic money to purchase the worthless paper!
Indeed, although I wouldn't trust even that. The banksters have totally captured the reguulators and no gov't figures can be trusted. They should be indexed to the price of gold.