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Ross Norman: The Mother Of All Gold Opportunities As Central Banks Walk The Line

Envision if you will a man with a bright red face … at first glance you might think he is in excellent health, glowing even … and on the other hand, it might suggest he has a fever … two completely opposite interpretations from the same facts … so to decide, you fall back on context. The same might be said of financial markets. Inflation can signal a robust economy or it could also signal trouble. The same might be said of bond yields.

On the face of it (pun intended), gold’s decline seems to be because it has held a long-term inverse binary relationship with declining bond yields (with a correlation co-efficiency of over 93%) and the recent rally in the 10 year rate has prompted 120 tonnes of ETF selling by Western institutions YTD (or 3.6% of total holdings) … but maybe markets are mis-reading events. Read more…..

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