Here is how the yield curve inversions boost the gold price
“The indicator on the bottom of this chart is the gap between the 3-month and 10-year US Treasury bond. As you can see it is now below zero, which means that the interest rate on the 3-month bond is higher than that of the 10-year. This is the very definition of an inverted yield curve and forecasts a future slowdown in the economy and future interest rate cuts from the Federal Reserve. Now as you can see this has happened twice in the past twenty years and both times it did gold soon broke out of a long-term resistance level to launch big massive gold bull runs that lasted for years.”
USAGOLD note: The reasons for those previous massive bull runs are twofold. The first has to do with economics. The Fed immediately talked up and inaugurated stimulus programs to keep the economy from rolling over to a deflationary depression and financial panic. The second has to do with market psychology. The possibility of a systemic breakdown ran at fever pitch causing a worldwide influx of capital into the gold market. The two together amount to the disinflationary argument for gold ownership and one we have made for a long time here at USAGOLD. The best strategy is to understand what’s at work in this economic milieu and make your purchases ahead of the clamor when it becomes evident to the masses.
Image courtesy of the World Gold Council
Repost from 6-11-2019