Gold flags and treasury treadmills, why this is a 1970s gold market
“I think, though, that the character of this bull market is about to change to more of a 1970s character. The turning point could have already been reached back in March. I believe we will soon start seeing 2 or more gold flags per month as we did in the 1970s. I say this for three reasons:
- Gold is now just starting to take advantage of a falling dollar index.
- There is preliminary evidence that gold is starting to trade inversely to bonds, or at least has the potential to, meaning gold rising together with bond yields, as it did from 1976 to 1980.
- While gold is still trading together with stocks generally, that may no longer be the case in 2-3 months.
Once all these conditions are met, this is the environment where gold flags can multiply. I believe we are on the cusp of this.”
USAGOLD note: A gold flag, says Austrolib, is “when gold rises on the same day that all other dollar-denominated assets fall. That is, US stocks, bonds, and the US dollar index all fall simultaneously as gold ticks up. That signals not just a shift out of dollar cash, but more significantly, a flight from all dollar exposure generally. It is a flight out of the global reserve currency of the world, which, in my opinion, signals a loss of faith in the monetary system.”
Repost from 8-24-2020