Goldtent TA Paradise

Yield Curve and SGR

1. Bikoo99 says:

   February 29, 2020 - 8:10 am at 8:10 am

   Thanks FUlly for asking a valuable question. Thanks to Seville for educating gold investors on drivers of price of gold in a business cycle.

   There are several drivers he talks about in this post in a response to Kieth Weiners position. Any one of these drivers out of seven may be dominant at a time. One of them is Yield spread. AS he writes:

   “2. The Yield Curve

   There has never been a strong and consistent short-term correlation between the gold price and the yield curve, but near major turning points the yield curve tends to be the dominant driver.

   In broad terms, the boom phase of the central-bank-promoted boom-bust cycle is generally associated with a flattening yield curve and the bust phase is generally associated with a steepening yield curve. Gold generally performs better during the bust phase, when the curve is steepening. Somewhat counterintuitively, banks tend to do best during the long periods of yield-curve flattening. This can be demonstrated empirically and makes sense if you understand how the central-bank-promoted boom-bust cycle works.

   A major flattening trend in the US yield curve got underway during the second half of 2011 and continues to this day. This flattening trend is associated with a boom, which, in turn, has temporarily helped the banks and reduced the desire to own gold.”

   If one look at the chart since 2011 that is what happen and the market is at the extreme point in widening of yield curve. Yes gold tend to lag the curve. Time of Other X’s there were other dominant factors for price of gold (PM sector) at play.

   Nevertheless PM sector w/charts turned bearish so it appears,

   https://tsi-blog.com/2017/06/addressing-keith-weiners-objections-to-golds-true-fundamentals/

   • Fullgoldcrown says:

     February 29, 2020 - 8:36 am at 8:36 am

     Thanks for the reply and explanation Bikoo

     These are complex rations and co relations for sure