Gold Diggers Turn 2 Inflated Treasuries

There’s gold in them thar bonds as investors shun the precious metal that’s strangely declining in value in favor of high interest treasuries, at least, until Fed stops raising interest rates … as it is likely to do September 22.

As the WSJ explains in its “What Should Have Been a Great Year for Gold Isn’t,” the historically-favored “yellow metal is supposed to be a haven when stocks are a mess [as they are now], but it is down almost 8% this year.” We’re told the actively traded gold contract … and contrary to what those investor commercials suggested would happen ad nauseum … is on a pace to decline for 6 consecutive months. If the trend continues, the so-called haven will be on its “longest losing streak since September 2018, when prices fell 9.9% over the same period.

Bottom line: Investors are seeing no point in buying deflated gold when US Treasuries are paying handsomely and will likely continue to do so as the Federal Reserve Board is expected to raise its own interest rate another 75 base points on Thursday in its avowed fight against soaring inflation. And, perhaps yet again in December when it meets again to parse the latest economic news at that time?

Davd Soul