Gold’s Risk Rises
Atlas Pulse Gold Report - Issue 111;
So much of the gold narrative has been around the death of bonds; the trouble is that I used to say gold was a bond issued by God. Much of gold’s recent strength came about since late 2023, when bonds started to stabilise. The gold miracle of recent years was that it didn’t fall when bonds collapsed.
There can be no doubt that the price of gold is overbought. More so than it has been for forty years. It can, of course, go higher, as it did in the late-1970s, but that was a crazy time.
Gold today is not just in a bull market, but a super bull market. Investors are buying gold, as are the central banks and the Chinese, and that is a powerful combination. This is no time to be a bear, but the gold bulls should certainly be looking over their shoulder, as Bitcoin offers a contrarian opportunity.
What’s more, many gold bulls have sought sanctuary in gold in lieu of bonds, which have been unstable. However, did you know that the 10-year treasury bond has a rising 200-day moving average, and that real yields are falling? I will address these points, and more, in this 111th issue of Atlas Pulse – my gold deep dive side project since 2012.
Gold Deviation from the 200-Day Moving Average
Putting the current bull market into perspective, it has lasted longer than the 1970s mania, but it is still shorter than the great bull of the 2000s. The price appreciation has been 5x since 2015, but 18x since 2000, which is about the same as the 1970s rally. Let no one be a party pooper, but this gold bull market is mature, however you look at it. That makes the journey riskier from here.
Gold Bull Markets
Yet if gold is elevated, equities are worse off. The World Index, jam-packed with technology stocks, is cruising for a bruising, and from that perspective, gold offers welcome diversification. Gold is now leading equities for good reason. Gold in equities has a ByteTrend Score of 5, meaning the trend of gold beating stocks is a strong one.
Gold versus Equities
Value matters, and it is more likely that industrial metals, energy, and agriculture make the big money from here. I cover commodity stocks and other opportunities for clients in our investment research at ByteTree.
Investors are right to be wary of the stockmarket, especially in the USA. Currently, money is flowing overseas, and that is bullish for global equities. This is a rebalancing, not a crash. However, when the US market takes a material turn for the worse, few things will be immune. The VIX Index, a measure of future volatility, is above its 200-day moving average again. That is not something to ignore.
The VIX Reawakens
