AAAU - Gold's Monetary Credentials Suggest Near-Term Upside

• Gold is trading over 5% below the level implied by its close correlation with inflation-linked bonds, suggesting short-term upside for the metal.
• The strong correlation reflects the tendency for investors to view gold as an alternative to fiat currency and we do not see this changing any time soon.
• Democrat spending promises will require huge amounts of debt issuance and money printing, which is likely to drive a further wedge between inflation and interest rates.
• A further supportive factor for gold is the ongoing rally in the commodity complex which indicates a broad upward shift in inflation pressures.

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