2024-04-24 22:34:41 ET
Summary
- Gold's historical inverse correlation with real interest rates has broken down over the past year, with gold rising with the US dollar.
- The US government may be on the verge of a significant monetary crisis if gold's value is correct, given it should be ~50% lower based on bond yields.
- Gold miners may see profits collapse if gold is merely in a speculative rally.
- If gold continues to rise, that signals global monetary instability, which I expect will eventually bring gold mining costs up proportionally.
- Most large miners in GDX are focused on developing countries with pronounced operating risks amid growing anti-Western sentiment and anti-capitalist government actions.
Something is broken in markets today. If not broken, there is a burgeoning anomaly that I believe may be one of the most important trends for investors to watch. Historically, gold is inversely correlated to real interest rates. That relationship is usually among the strongest between asset classes but has broken down over the past year....
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GDX: Global Monetary Instability Raises Mining Costs Proportionally To Gold