Someone Is Betting Big For A U.S. Treasury Bond Collapse

William Gross, Manager of the world's biggest bond fund at Pacific Investment Management Co. (PIMCO) participates in the Obama administration's Conference on the Future of Housing Finance in the Cash Room of the Treasury Building in Washington in this August 17, 2010 file photo. Reuters

Pimco's Gross Betting Against U.S. Debt -- Fortune/CNN

Bill Gross is putting his investors' money where his sizable mouth is.

Gross, who manages the world's biggest bond fund and has spent recent months jawboning about the dangers of U.S. debt, has placed a $7 billion bet against Treasury bonds, according to the latest statistics released by his Pimco Total Return fund.

Gross made a splash last month by selling all the big bond fund's Treasury holdings and calling the federal budget a Greek tragedy in the making. Now he has gone one better, leaving the $236 billion fund with a short position in U.S government debt for the first time since February 2009 – and putting a third of the fund's assets in cash.

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My Comment: The consequence of a U.S. Treasury Bond collapse is frightening to think about. But Bill Gross usually knows what he is talking about .... and he seems to be very sure about a U.S. Treasury bond collapse in the foreseeable future.

What is my take .... I got out of all of my U.S. holdings 5 years ago (I live in Canada) .... and I have had no regrets since.