Gold and Silver Macroeconomics Bullish Environment

11 jun 2020

With the US10Y at .67 this is a situation where effectiley what we're looking at, is a real yield that is in fact, negative. During this entire period, gold has stayed higher. If gold doesn't have a YTM or coupon payment, investors will only put money into this when traditional securities aren't offering risk-adjusted returns. With the Fed saying yesterday that interest rates could stay this way until 2022, the Fed will continue QE for a long period of time. Going forward, when inflation rises, the Fed won't be raising rates. Inflation will be rising faster than U.S. yields. An environment that is defined--rerguardless of the upside to inflation-- we're likely to sustain a consistent period of growth, considering where interest rates are.

This for me is bullish both Gold AND silver. The sweet spot is where the Fed doesn't recover, yet the Fed doesn't need to juice the economy to much. This can be compared to the 08-09 recovery. Silver prices (Mar 09) was a week when U.S. bottoms, silver closed at almost 20/oz. Silver prices explode traditionally when the Fed is pumping the economy. People sell gold to raise capital, during the peak of the crises this year. Gold prices have since stabilized and returned to fresh yearly highs. This is an extremely bullish environment for precious metals.

12:23:28 (UTC)
Thu Jun 11, 2020