Gold is the Anti-Bond

Gold is the Anti-Bond. Gold strength since 2008 is not due to lower bond yields, but due to central bank gold buying. 

Gold Vs. USD

When USD goes down, gold goes up. 

Central Banks buying gold from ETFs

Recently, the gold price has been rising while gold ETFs were flat. This started in Q4 2022. The gap is about 200 tonnes of gold in GLD.

This coincides with central bank gold buying of about 200 tonnes per quarter which started in Q3 2022.

Oil hasn't capitulated yet

 

Tax Rate Vs. Debt to GDP

Tax rates are correlated to debt to GDP.

 

Scarcity Vs. Elasticity - Gold Vs. Credit

The natural hierarchy of money starts with gold at the top. Everything else is credit.

• Gold
• Currency
• Deposits
• Securities

As credit expands and contracts, the pyramid grows wider and narrower. In a credit expansion, liquidity flows from gold to credit and vice versa.

The federal reserve can increase the expansion cycle by inducing elasticity and lowering interest rates. The yield curve uninverts. Liquidity flows from gold into securities (stocks and bonds). 

Conversely, the federal reserve can induce scarcity and a credit contraction by hiking interest rates. The yield curve inverts. Liquidity flows from securities into gold.

A rate hiking cycle leads to gold outperforming stocks. A rate cutting cycle leads to stocks outperforming gold. This happens with a delay.

An inverted yield curve leads to a rising gold price as liquidity flows from securities into gold.

This all leads to the concluding chart which connect the prices of money with the hierarchy of money:

Oil Vs. Copper demand

Oil demand doesn't look particularly strong.

Oil supply isn't helping either.

Copper looks better.

Comparison:

Gold Forecaster Index: Gold is the Anti-Bond (06-Jul-2023)

 

Yield Curve Inversion Vs. Population Growth

Yield curve inversions happen when the population growth slows down.

Housing inventory is inversely correlated to the yield curve.

 

Foreign Gold Deposits Rising at New York Fed FRBNY

Foreign gold deposits at the New York Fed are once again rising. This tells me central banks are buying gold again. 

And it's not China and Russia, because they wouldn't store their gold at the Fed. So it must be the developed markets.

Gold and Gas Seasonality

Gold seasonality favours a move up. 

Natural gas seasonality favours a move lower.