Loading ...RE: “INTERESTING” CHART
Sir FGC posted a chart on $TNX suggesting interest rates about to double (from 42 today to PO @ 80). So what does that inform us … ???
What FGC fails to inform us in his analyse are the (counter) effects within markets!
See below, same chart but with $GOLD overlay (in Gold-colour). Pretty obvious that as TNX goes UP, GOLD has in general the tendency to go DOWN. Although I am not into further analyzing interest rates as even such is NOT PURE … Sir FGC must admit that if he projects TNX to double from today than HIS conclusion MUST BE that $GOLD DECLINES.
Thank you. Have a Nice day!
IMO.DYODD.
People will bring up the 1970s as an example of when interest rates rose with gold.
But the chart is what it is, and the 10 year yield has rallied dramatically vs gold since 2020, while gold itself has basically gone nowhere, which I suppose is better than going lower.
The real question is, is at what point do interest rates break the economy? I would assume gold will be discounting this well in advance of this happening. Because at that point, the Fed will likely institute some form of yield curve control or will start QE again.
I’ll give the Fed chair credit for this–a ton of goldbugs myself included (and the likes of Peter Schiff) didn’t think the Fed would have the balls to raise interest rates at all or stop QE. Well those theories have been proven patently wrong. Moreover, the likes of Peter Schiff predicted an economic crash if the Fed was dumb enough to raise interest rates or start to do QT–again, at least for now, he has been dead wrong.
The Fed has somehow, with the help no doubt of coordinated global central bank policy, been able to keep the ship afloat, and the goldbug theories of hyperinflation and economic doom have yet to pass. That isn’t to say it will never happen, but on a long enough time line, we are all dead anyway.
I am also not dumb enough to think a dramatic drop in gold isn’t possible. Anything is possible.
One chart to look at is the long term chart of palladium. It “based” at a high level for 5 years and looked like it was set to take off in 2014, but then between 2014-16 it fell all the way to test its rising 600 WMA iirc. Thereafter it rose dramatically and more than tripled its 2014 high.
If gold did something similar, it could drop all the way to $1485 (probably $1500 by the time it reached its rising 600 WMA).
Gold follows REAL rates, not nominal.
And expectations of real rates, at that.
So gold could rise, even if rates went to 8%.
IF OVERALL PRICES WERE SHOOTING UP BY 20%.
Then 8% is cheap, folks borrow fiat, and asset prices rise.
Gold may go up but SMH might go up faster.
Very good point. This was very true in the 1970s, when the Fed was raising rates but never above the rate of inflation–that is until Paul Volker raised rates to 20% in 1980!
whats SMH?
“Shake my head” or a semi-conductor ETF. Haha.
secret macho handshake…. maybe??
‘Gold follows REAL rates, not nominal.’ … oke but what is the point of presenting a chart as TNX.
Maybe we should post a Rectangle of blood pressure … not hoping for a BO. Just as non-informative then …
Enlight me … what does Fully’s chart inform us? Not clear to me what his message is!
Nevertheless … $GOLD goes opposite as $TNX is is a fACT as for these charts with $GOLD overlay (!) and Fully is projecting a doubling for TNX. What paper-gold goes in HALF?
Sir Nightingale,
Something tells me that you don’t believe in “it can be different this time”.
What’s that something? Your saying “fACT”.
Is the current CPI number a “fACT” or fiction? Do you buy gas or groceries or stationery items? Do you pay rent? Medicines, over the counter?
But, you gave away a clue: paper-gold !!!
What about the phyzz? Let me know where/when/if you can buy phyzz gold at the same price (plus a small premium) as the paper price.
GL
We all love the phrase ‘This time is different’. But in general mostly it never is. Of course we have paper and PHYZ. Besides some reasonable premium when buying at a dealer … at this point there is no dis-connect as for market prices. Sure there are some differences in PHYZZ like American Eagles but other Ag-coins like Maple Leaf are not that far-off. But the difference for recent prices for coins are not far off.
And then some … we buy PHYZZ and we have LIVE PM prices but Stock charts shows futures. Must be me but I found that serious for an complaint towards Stockcharts. I chart PM at this moment … not futures. What a rubbish!
Like I might gave away a clue … so did you and inter acts with Pedro_deleon remark which is inflation into real-rates.
So can anyone or Sir FGC present a chart with Real interest rates with an overlay for Gold prices.
MY MESSAGE IS THAT INTEREST RATES ARE “LIKELY” GOING TO DOUBLE BASED ON THE CHARTOLOGY
I leave it to you all to figure out what that means for gold et al
I Do agree with Sir Nautilus that Permagoldbulls have been dead wrong about Rising rates Crashing everything
The US Govt was sure to default as their interest payments go to trillions…didn’t happen