Vine Investing
  • Home
  • Home
Search by typing & pressing enter

YOUR CART

2/14/2016 0 Comments

Gold as a play on US yields ability to stay positive

The gold rally has gotten a lot of attention lately with many analysts citing a flight to safety, fears of a recession, etc. These are all factors that go into the decision to purchase gold but the rally as of late have more to do with lower yields than anything else. With the amount of money in debt that is currently yielding a negative rate the opportunity cost that keeps some from purchasing gold has gone positive. But in Europe negative rates were not something that occurred in the past month, likewise Japan is not imposing negative rates on the majority of their deposits either. The biggest factor that has sparked interest in gold is the change in perception that the Fed will keep bucking the trend and increasing rates. Talk of negative rates as a policy option and concerns surrounding the global economy has flattened the yield curve in the US and put the dollar into question in terms of its recent strength as well as the yields that can be derived from dollar debt. This is why we see such a strong inverse correlation between the long end of the treasury curve (yield) and gold. With inflation expectations looking dim and rates moving more negative around the world, holding an asset that may not have a return, but importantly doesn’t have a fee, looks like a safe bet at the time.
Picture
Next week the Fed minutes will be released which could shine some light on the conversations between governors about the relative strength of the US jobs markets and how they can hold up to the concerns about the global economy.  Gold will remain a US Yield play so long as other safe haven bonds are charging for the right to hold them.
0 Comments



Leave a Reply.

    Archives

    June 2020
    April 2020
    March 2020
    December 2019
    November 2019
    October 2019
    September 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    July 2017
    June 2017
    May 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    April 2014
    March 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011
    November 2010
    October 2010
    September 2010
    August 2010
    July 2010
    June 2010
    May 2010
    April 2010
    March 2010
    February 2010

    Categories

    All Chinese Debt Commodities European Disunity Inflation Policy US Earnings

    RSS Feed