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Nothing Has Changed Gold was once again taking a hit, closing


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It’s clear that the bond bubble has burst, as the yield on the 10 year has risen substantially over the last few days. While yields are still below where they were earlier in the year, they have reached their ultimate low in this long bull market. This is obviously making the markets nervous as it means that inflation is about to get bad. But once people realize that the Fed is so far behind the curve on inflation they will start piling back into assets like stocks. Rising bond yields are all part of the equation here.

Gold was once again taking a hit, closing down $17 to $1,381. The USD was flat so that didn’t really cause the weakness in the precious metal, rather it was worries about rising bond yields, which doesn’t really make any sense.

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https://sites.google.com/site/goldelviroxfashion/gold/nothing-has-changed

The ^HUI had a rough day as well, it was down 13 points to 564. I’m thinking that this was it for the sell-off but we will have a few days of back and forth as the index bottoms out here.

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https://sites.google.com/site/goldelviroxfashion/gold/nothing-has-changed

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https://sites.google.com/site/goldelviroxfashion/gold/nothing-has-changed

I think people are getting confused on what is going on here so I’m going to try and explain. Rising bond yields are all part of the equation. They are mainly signaling inflation rather that strong economic growth. This isn’t dollar positive, but people think it is because they assume that the Fed is going to start raising rates. But it can’t, if it does then we are right back to square one as this would create another wave of bankruptcies, higher unemployment etc. So the Fed is screwed here. It’s just going to have to wait until there is enough inflation in the system that it would be safe to start raising rates.

Once people figure out all of this, the dollar is going to tank hard as the Fed just sits on its hands and does nothing. This is how this game will play out. I don’t know why people think yields would be falling after the enormous amounts of money printing that the Fed has been doing. Eventually it was going to have an effect and we are seeing that evidence right now. The inflation trade is still on, nothing has changed here.

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https://sites.google.com/site/goldelviroxfashion/gold/nothing-has-changed

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