$USB Monthly

We could see a massive short squeeze in the long dated treasury bond price, but more than likely a price correction is in order.

The last time the $USB price took months to roll over was in 1999, the top of the internet bubble. What has transpired since then was a massive re-inflation of the bond markets and expansion of the interest rate derivatives bubble.

What should have been a time of outperformance of the gold mining stocks has led to a major disaster in share price valuations and stock dilution. It didn't matter what you reported in terms of results, as long as the bond price advanced, you sold the mining junior and bought the long-dated treasury.

Since that time, Canadian politics entered the fray and deregulated the Asset-Backed Commercial Paper bond market by allowing covered bonds with no regulation. So in 2006 gold mining stocks were literally crushed, with the exception of a very few aggressively marketed open pit scenarios. (There are some examples of exceptional gold plays out there just the same, but did not obtain their value until after the financial crisis.)

If and when the long-dated treasury bubble finally rolls over and corrects in price, (it might never do so) or the U.S. dollar finally collapses to a fraction of its value (which might be the outcome) then Canadian gold stocks will finally get a reprieve.

Canadian short dated treasuries are still yielding ~1%, so when short dated treasuries fall below 0.5%, then the calculated Net Present Value of producing gold miners begins to rise by a multiple in parabolic fashion in Canadian dollar terms.

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stockcharts.com

-F6