The dollar and US Treasury bonds can offer investment opportunities if you watch them carefully. Thomas Kee, the CEO of Stock Traders Daily in La Jolla, California wrote recently on this topic.

He observed that the long bond repurchases are complete, and he wonders if there is any money left to purchase mortgage-backed securities and agency bonds. His concerns are well-founded, and as he wrote in his article at MarketWatch.com, there is reason to believe that treasuries might be in a bubble-like condition:

"We know when things don't look right. In early 2000, it was the Internet bubble. Anyone thinking rationally could see, earnings versus prices of Internet stocks did not add up. More recently, we could all see the free credit environment leading up to 2007. When the baristas at Starbucks are getting hundreds of thousands of dollars in loans with no money down, something has to be wrong. Anyone paying attention saw the opportunity to reap significant rewards from these two simple observations. Now, there is a third opportunity.

"This bubble may be the biggest one of them all. The Treasury bubble is about to burst.

"By now, most investors are wondering why the demand for U.S. Treasury bonds seems so high. The U.S. dollar is declining, interest rates on U.S. Treasurys are extremely low, and other investments have been doing far better. Government officials and the Federal Reserve chief have proclaimed an end to the recession, and that adds to the confusion.

If the recession is over, why are so many investors scrambling to buy U.S. Treasury bonds that pay nothing? The U.S. government would like you to believe that demand comes from foreign nations. However, that is not entirely true. In fact, there has actually been an exodus of foreign funds from the U.S. in 2009. Still, demand appears robust, but it could not just come out a thin air, or could it?

"It just might. The U.S. Treasury began buying agency debt in January of 2009. It began buying long-term government bonds in March. And it has been buying mortgage-backed securities since 2008. This was all done in an effort to stabilize the credit markets and keep interest rates low. At least, that was one of the reasons.

"Another might be the government's interest in satisfying its own debt obligations and propping up the dollar so it remains a world currency. With careful observation, this second reason begins to make more sense. In fact, a review of the current accounts that foreign central banks hold in the U.S. makes the Treasury bubble much more clear.

"Foreign central banks owned a tremendous amount of agency bonds. In March, the U.S. government committed to buying hundreds of billions of dollars in U.S. agency bonds. In total, the U.S. government committed $1.2 trillion to this combined effort.