Commodities Analysis by Gary Tanashian covering: XAU/USD, Gold Futures, 30 Year Treasury Yield. Read Gary Tanashian's latest article on Investing.com
The subject of this post has been made anonymous, as I’ve decided to release it to a wider audience. Said subject anonymized those he was critical of and so, turnabout is fair play.is misunderstood by analysts that claim it is a hedge against inflation and a hedge against stock market weakness. On the surface, he is correct.
It is a bubble that I believe has ended, although it doesn’t consciously know it yet, with policy-propped asset markets now little more dead men walking. That assertion is based on several macro indicators I use, but none are more visually striking than the decades long trend break in the Gold is not supposed to rally in nominal terms during crises. It is supposed to retain relative value. Here is what gold did in relative terms to SPX during that crisis. After its relatively moderate nominal decline, gold led most markets out of the abyss before the inflationary bailout operations of central banks and governments set it up for a long correction as cyclical markets regained footing. That was as it should be for the anti-bubble.
Gold got hammered during Armageddon ’08 , but in relative terms it rose strongly vs. SPX and rocketed higher vs. cyclical commodities like oil and base metals. It then went on to out and under perform periodically as cyclical inflation manifested out of the 2008 policy panic and subsequent years of Zero Interest Rate Policy .
The point with gold is its relative performance. Nominally, it is going to go up or down as the prevailing winds and varied macro inputs dictate. But the big picture macro is what is important. Where has it been? Where is it going? What is it indicating? As for the “surprise” of gold being correlated with asset markets lately, it is already noted above that gold is either being set up for price pressure when a broad bear market ensues or it is diverging to indicate the new macro.
Gold’s case should not be simplified to only sentiment unless we are discussing the very big macro picture. While sentiment is an important tool in managing an inherently emotional sector like the precious metals, it is far from the only consideration. Mr. A is writing in linear fashion, as if the decades of the Continuum’s downtrend were still intact.
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