In this post Steve Saville shows the long-term correlation between the 30yr bond and the Gold/Commodities ratio.
Almost as if Steve’s ears were burning (after my post tapping the breaks on the bond bear case) he offers up more reason not to be a full bore bond bear just yet. It has to do with the very logical correlation of this chart.
He then presents a shorter-term chart showing a recent disconnect and…
The next chart zooms in on the most recent 2 years and shows that over the past three weeks there has been a significant divergence, with the gold/commodity ratio turning upward and the T-Bond price staying on a downward path. It’s a good bet that this divergence will be eliminated within the next two months via either a decline in the gold/commodity ratio to a new multi-year low or a rebound in the T-Bond. My money is on the latter.
Check out the article. It’s well worth your time.
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