In response to EagleSeagles interesting post and link, I thought I’d take a closer look. Here’s how gold and the 10 yield have been getting along…

Now the US 10 year yield minus the German 10 year yield, versus gold price…

The trouble is that I can’t find this comparison of these yields pre 2008. Even so, you can see the relationship is sometimes positive and sometimes negative with gold price. The same goes for the CRB index…

In my view, the Tom Bowley article, whilst interesting, is fatally flawed. It doesn’t prove a causal link. Even over this ridiculously short timescale (since 2008), the CRB and gold price movements are not always in sync with the US/Germany 10 year yield difference. In order to even begin to draw a conclusion, you would need to find data going back through a minimum of 3 economic cycles. I’d be particularly keen to know how it looked from approx. 1995 to 2008. So far there is nothing in this data to show that commodities or PM’s are heading for a drop or that the dollar is heading back up in any meaningful way. I’m not saying that can’t happen, just that this information isn’t robust enough to support any conclusions at all.