Loading ...Yield Spread TYX to FVX vs HUI miners PM sector
Finally the spread between 30 yr T bond and 5 year T Bond break out to widening. Bottom HnS has been on watch.
Implication of widening of this spread is in earlier post here on goldtent.
Hopefully past relations still works.
From 2003 to 2007:
“as yield spread widened (short term interest rates fell relative to long term rates) gold trended higher relative to industrial metals and HUI provide substantial leverage to gains in the gold price. However, the ability of gold stocks (HUI) to leverage gains in the gold price evaporated when the yield spread began to contract (narrows) and gold began to under perform the industrial metals.”
” a major yield-curve reversal from flattening to steepening is driven by the unravelling of an artificial boom or rising inflation expectations, it is bullish for gold. By the same token, a major reversal in the yield curve from steepening to flattening is always bearish for gold.”
Yep. This was anticipated by gold. But good to see anticipation come to reality.
Fantastic analysis. Thanks Bikoo.
Bikoo, One problem though:
The shorter end of the yield curve, $TNX:$IRX — 10 yr:3mo, is still FALLING.
They BOTH ($TYX:$FVX and $TNX:$IRX) need to be rising to exert a positive influence on gold.
Yes the shorter end is still narrowing. FED can not control the long end but has been active with the short end. once yield spreads start widening in all maturities there will be sight to see.
This feels… like the remaining bullets in the feds revolver will be unloaded faster than expected. This will strongly accelerate the gsr for the next strong leg up in PMs.. and especially silver (+equities and other commodities). Will we burn and crash after? I guess will have to see.