Currently looking at a chart from this A.M.'s GCRU newsletter. A 54 year chart (1967-2021) comparing gold to real T-bill yields. Shows that during great gold bull mkt decades of 1970s & 2000s it didn't matter if negative rates became less negative due to rising rates. Gold rose
Didn't even matter if "real" rates went slightly positive. As long as they were low, gold still rose. For example, from the summer of 1977 to early 1980 gold skyrocketed as the fed funds rate was lifted from 4.75% to 15%. It was only when Volcker raised to 20% did gold break
GCRU conclusion: "You’ll notice whenever the real yield (in that 54-yr chart) has been over 3-4%, it has put downside pressure on gold. But whenever the real rate
has been below that level, it has been bullish
for gold."
has been below that level, it has been bullish
for gold."
Another example: Fed raised fed funds rate from 1% in June 2004 to 5 1/4% in June 2006. Gold soared from under $400 an ounce to over $700 during that period (real rates stayed below 3-4%). History does not confirm the current algo/hedge fund-"real rate rise" gold selloff story
For those wondering about a 10-yr Treasury rise. 10-yr. soared from around 7.75% in summer of 1976 to 10.4% at the end of 1979. Gold went from $100 to $500 (up 5X) during that period. 10-yr Treasury yields also rose during June 2004-June 2006 period. Gold nearly doubled in price
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