Bank of America (NYSE:BAC) Says Treasuries of All Maturities Lose 2.7 Percent in December

A Bank of America (NYSE:BAC) index released by the company shows that Treasurys of all maturities fell 2.7 percent in December so far.

Year-to-date yields have moved up by 2.79 percent since November 30, the largest boost since July 2003.

Concerning two-year yields, they pushed up the most since December 2009, rising from 0.49 percent.

30-year Treasury bond yields also rose to their highest levels since January 2009, the fourth straight month they increased.

So far in 2010 bonds have risen 4.94 percent.

Corporate bonds on average dropped 2.1 percent in December, but are up 8.2 percent for 2010.

PIMCO's Total Return Fund Getting Crushed on Bond Selloff

Bill Gross' PIMCO Total Return Fund is getting hammered in the midst of investors fleeing Treasury bonds.

For the 30-day period ending December 8 the $250 billion fund lost 3 percent.

Starting on December 1 through the 8th, the fund has plummeted 1.2 percent.

For the month of November, the fund lost $5.75 billion, a drop of 1.4 percent.

The fund had bee providing a return of just over 8 percent annually over the last five years through December 8, besting the fast majority of its competitors.

China, U.S. Currency War Escalating

China shot off its own response to the aggressive comments by some American politicians and business leaders over the alleged idea that they are manipulating their currency to their own advantage.

With political pressure in the U.S. mounting, this could turn into an unpleasant and unprofitable dispute for both countries, with the U.S. having the most to lose.

Some business groups claim the yuan is undervalued as high as 40 percent, although that's largely conjecture and not able to be proved.

Even so, the Chinese currency is almost surely undervalued to some degree, and could rise some if allowed to by the Chinese authorities.

But the problem is the way America is dealing with the situation, where populist-leaning lawmakers from America are making a lot of noise in order to get noticed by their constituents regarding looking like they're doing something about the problem.

With China holding so much U.S. debt and being in the much stronger position from that point of view, it doesn't make much sense to do the public saber-rattling which can sometimes lead to stupid decisions because of not being willing to back down.

China asserts its global trade surplus will probably drop to a trade deficit in March, after plunging by 50 percent in January and February.

GFMS Looks for Gold to Surge in Second Half of 2009

While gold could average around $915 an ounce in the first part of 2009, it's in the second half that it could really soar, according to consultancy GFMS in its Gold Survey 2008 report. They project gold could reach as high as $1,080 an ounce as the U.S. dollar inevitably weakens. (Why the U.S. dollar will plunge in 2009.)

The average price of gold in 2008 was just under $872. Today gold was trading over $816 at 4:30 EST.

For the year, GFMS is looking for a trading range for gold of $750 an ounce to $1,080an ounce.

There's no doubt gold will rebound, as the bubble will burst sometime in the year for U.S Treasury bonds, which are wrongly being touted as havens of safety. Click on the link above to find out why that's so.

Because we don't have any idea how much more forced liquidation is out in the market, it's the one variable that could allow the U.S. dollar to remain temporarily strong, as companies continue to sell assets to cover their losses and raise cash.

Even though demand for gold in jewelry fell by almost 11 percent last year, that shouldn't have any impact on the price of gold, as safety and inflation protection will be the driving forces pushing the yellow metal up.

With the Federal Reserve going to be forced to print more money to cover the misguided bailout-mania and acquisition of Treasury bonds, that will also eventually push the strength of the U.S. dollar down and drive people toward gold. It's only a matter of when, not if.