Enquire Now

Please provide your details to reserve space at Guardian Vaults.

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

Enquire Now

Anyone who follows gold on a regular basis would have noticed the current obsession with the US 10 Year bond yield, with each tick higher or lower corresponding with a very strong inverse correlation in the gold price. A lot of media commentary has been around the fact that this trend of rising bond yields could mean the death of gold, and that higher bond yields are seen to be a negative when you factor in the opportunity cost of holding zero yielding gold. But there is something more to the story which we will cover in this week’s update as we attempt to answer the question: can bond yields and gold rise at the same time?

For those without the patience to read this week’s update, the answer is ‘yes’, but it all depends on one thing: inflation. With bonds having been through an almost uninterrupted 40-year bull market, there are few periods of significance where bond yields have risen for an extended time in recent years; however, we will look at these periods and compare how gold performed in retrospect.

The first noticeable period would be during the economic boom pre-GFC where the US 10Y yield rose from a low of 3.2% in 2003 to a high of 5.2% in 2007, whereas gold in USD terms still managed to rise from under $400 per ounce to over $650 in the same time frame.

Can Gold and Bond Yields Rise in Unison?

We can see that there is no economic law that states bond yields and gold cannot rise at the same time, so perhaps the fear around rising bond yields is misguided. If we wind the clock back further, we can take a look at the best example of a period of significantly higher bond yields and interest rates, and that is the inflationary period of the 1970’s. An incredible period of time from a number of perspectives, and many gold investors would remember the end of the gold standard in August of 1971.

The following three charts show the yield on 10-year Treasuries, the gold price in USD terms, and the inflation rate at the time.

Read Full Article Here

After hitting a low of USD $1760 during Sydney’s trading session on Friday, Gold recovered back above $1800 this week.

CLICK HERE TO READ FULL ARTICLE

John Feeney

Guardian Gold Sydney

If you have any feedback or questions about this report, you can contact John Feeney direct at johnf@guardianvaults.com.au or on Twitter @JohnFeeney10

To find out more feel free to call through and speak to one of our representatives or email your questions to sydney@guardianvaults.com.au

______________________________________________________________________________________________

Click to see our latest bullion deals on metal in stock at low premiums. 

______________________________________________________________________________________________

https://www.pewresearch.org/science

https://tradingeconomics.com/united-states/government-bond-yield

https://www.fxstreet.com/analysis/the-santa-rally-approaches-a-halftime-break-202011200038

https://www.intellinews.com/attack-of-the-debt-tsunami-global-debt-soars-to-a-new-all-time-high-196972/

https://fred.stlouisfed.org/series/M2https://stockcharts.com/h-sc/ui

https://www.businessinsider.com.au/warren-buffett-indicator-nears-record-high-signals-stocks-risky-overvalued-2020-11?r=US&IR=T

https://www.multpl.com/shiller-pehttps://www.tradingview.com/chart/?symbol=SP%3ASPX

Disclaimers: Guardian Gold, Registered Office, Scottish House, 100 William Street, Melbourne, Victoria, 3000. ACN 138618176 (“Guardian Vaults” & “Guardian Gold”) All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from the publisher and/or the author. Information contained herein is believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal situation. Guardian Gold, its officers, agents, representatives and employees do not hold an Australian Financial Services License (AFSL), are not an authorised representative of an AFSL and otherwise are not qualified to provide you with advice of any kind in relation to financial products. If you require advice about a financial product, you should contact a properly licensed or authorised financial advisor. The information is indicative and general in nature only and is prepared for information purposes only and does not purport to contain all matters relevant to any particular investment. Subject to any terms implied by law and which cannot be excluded, Guardian Gold, shall not be liable for any errors, omissions, defects or misrepresentations (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (direct or indirect) suffered by persons who use or rely on such information. The opinions expressed herein are those of the publisher and/or the author and may not be representative of the opinions of Guardian Gold, its officers, agents, representatives and employees. Such information does not take into account the particular circumstances, investment objectives and needs for investment of any person, or purport to be comprehensive or constitute investment or financial product advice and should not be relied upon as such. Past performance is not indicative of future results. Due to various factors, including changing market conditions and/or laws the content may no longer be reflective of current opinions or positions. You should seek professional advice before you decide to invest or consider any action based on the information provided. If you do not agree with any of the above disclaimers, you should immediately cease viewing or making use of any of the information provided.

Anyone who follows gold on a regular basis would have noticed the current obsession with the US 10 Year bond yield, with each tick higher or lower corresponding with a very strong inverse correlation in the gold price. A lot of media commentary has been around the fact that this trend of rising bond yields could mean the death of gold, and that higher bond yields are seen to be a negative when you factor in the opportunity cost of holding zero yielding gold. But there is something more to the story which we will cover in this week’s update as we attempt to answer the question: can bond yields and gold rise at the same time?

For those without the patience to read this week’s update, the answer is ‘yes’, but it all depends on one thing: inflation. With bonds having been through an almost uninterrupted 40-year bull market, there are few periods of significance where bond yields have risen for an extended time in recent years; however, we will look at these periods and compare how gold performed in retrospect.

The first noticeable period would be during the economic boom pre-GFC where the US 10Y yield rose from a low of 3.2% in 2003 to a high of 5.2% in 2007, whereas gold in USD terms still managed to rise from under $400 per ounce to over $650 in the same time frame.

Disclaimers: Guardian Vaults Holdings Pty Ltd, Registered Office, Scottish House, 100 William Street, Melbourne, Victoria, 3000. ACN 138618176 (“Guardian Vaults”) All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from the publisher and/or the author. Information contained herein is believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal situation. Guardian Vaults, its officers, agents, representatives and employees do not hold an Australian Financial Services License (AFSL), are not an authorised representative of an AFSL and otherwise are not qualified to provide you with advice of any kind in relation to financial products. If you require advice about a financial product, you should contact a properly licensed or authorised financial advisor. The information is indicative and general in nature only and is prepared for information purposes only and does not purport to contain all matters relevant to any particular investment. Subject to any terms implied by law and which cannot be excluded, Guardian Vaults, shall not be liable for any errors, omissions, defects or misrepresentations (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (direct or indirect) suffered by persons who use or rely on such information. The opinions expressed herein are those of the publisher and/or the author and may not be representative of the opinions of Guardian Vaults, its officers, agents, representatives and employees. Such information does not take into account the particular circumstances, investment objectives and needs for investment of any person, or purport to be comprehensive or constitute investment or financial product advice and should not be relied upon as such. Past performance is not indicative of future results. Due to various factors, including changing market conditions and/or laws the content may no longer be reflective of current opinions or positions. You should seek professional advice before you decide to invest or consider any action based on the information provided. If you do not agree with any of the above disclaimers, you should immediately cease viewing or making use of any of the information provided.