Loading ...TNX to UST2Y Ratio of Long term rate to short term rate
Interest rates have been rising.
Gold and silver should benefit from rising rates yet gold and silver have been declining or moving sideways.
The charts show that ratio of long term rates to short term rate when rises have positive effect on price of gold, silver, silver to gold ratio and miners. Declining ratio has negative effect.
The 10 year rate to 2 year rate ratio chart with SGR shows that rising ratio environment in market place had positive effect on SGR uptil 2011.
Rates across the maturity rise but the ratio may continue to decline thus SGR trend may not change. The second chart ratio vs five year rate confirms that ratio can continue to decline’
However last week the ratio may have breakout from down trending line. If it is the signal of change in trend of the ratio than expect SGR to turn soon.
In other words a Rising Yield Spread ( 10 year rates rising faster than 2 year rates) is Positive for the Silver Gold Ratio which is Positive for Gold !
Just clarifying as this can be confusing to newbies (and oldbee’s too)
🙂
Yes! thats what the combo chart is telling. Long term rates rises faster than short term OR long term rate drops SLOWER than short term rate. Confusing!!! yes. The ratio up/down direction should not be confusing.
From 2000 to 2011 the ratio went up but long term rates dropped slower than short term rates (in declining rate environment) thus the ratio went up and market saw PM sector in up trend.
Excellent charts….thanks Bikoo99. please keep us posted