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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Bearcatbob who wrote (155692)	8/23/2011 12:17:35 AM
From: Archie Meeties	1 Recommendation Respond to of 206121

It doesn't make rational sense. I clearly remember Taleb saying publicly that one would be a fool to be long treasuries almost a year ago. My best guess is that there are many public and private portfolio's that work from a fixed or stable asset allocation model. For example, 30% into bond funds. These bond funds have a certain asset allocation and an average bond rating. So for example if the rating is B+, then paradoxically, if a chunk of the assets fall from AAA to AA, then they must increase their purchase of AA assets to maintain the average. Given the limited (at this point almost nonexistant) AAA ratings, bond managers are forced to buy more AA rated US paper to maintain the average. When this thought occurred to me I cynically considered the downgrade as a stealth form of QE3... This is my best guess. How this unwinds I'm not sure. But hopefully gradually!