WPM - Recent Weakness In Precious Metals Prices Signals Beginning Of A Major Short Opportunity
- Gold prices are down over 10% YTD and flash crashed over $60/oz. on Asian market open Sunday night.
- Gold will continue to trade as a "risk-on" asset and will not provide a hedge against a financial market downturn as the Fed has no further policy accommodation space.
- Gold prices are inversely driven by the expected real UST yield as well as a currency component where a stronger USD is gold price negative.
- High US-centric inflation is not good for gold prices either as it fuels rising UST yields relative to global counterparts and a stronger USD.
- Real (inflation-expectation-adjusted) UST yields are likely to rise due to larger than normal US government supply issuance coinciding with a Federal Reserve taper (demand pullback).
For further details see:
Recent Weakness In Precious Metals Prices Signals Beginning Of A Major Short Opportunity