Doug Casey: Go Short Interest Rates

June 24, 2009 at 12:45 pm  ·  Category: Inflation, Interest Rates

People who short interest rates – in other words, people who bet they are going much higher in the coming years – are going to make a fortune.  I think interest rates will go back to the levels we saw in the early 1980s, possibly higher.

Now, there are basically three ways you can capitalize on that.

1. The riskiest way is to short interest rates on a futures exchange.  That’s not the easiest way to go, for a number of reasons, but it’s the most direct.

2. An easier way is to buy a reverse ETF, which is like an ordinary stock that gives leverage to interest rates.

3. The third thing, and this is something that almost everyone can and should do, since most people own homes, is to take out the largest mortgage you can against it on a fixed, low interest rate.  As interest rates go up, the value of your mortgage goes down.

Doug Casey

The reverse ETF to buy here is the ProShares UltraShort 20+ Year Treasury ETF (TBT).

Disclosure: Top Gun is long TBT.

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