Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines

Handicapping the Precious Metals Through Year-End
By: Michael Ballanger

Calls Intensify for Halting Interest Rate Hikes
By: Clint Siegner

Technical Scoop - Weekend Update November 19 2018
By: David Chapman

Gold: Still Money For a Reason
By: Rory Hall

GoldSeek Radio: Bill Murphy and Rob Kirby, and Chris Waltzek

SWOT Analysis: M and A in the Goldfields
By: Frank Holmes

The Primacy Of Income
By: Adam Taggart

The Gold and Silver Corrective Rally is Almost Over
By: Przemyslaw Radomski, CFA

The Ultimate Stablecoin
By: Keith Weiner

The cost of government debt is immediate
By: Steven Saville


GoldSeek Web

US Treasury Bonds, Gold & Stock Market

 -- Published: Monday, 2 June 2014 | Print  | Disqus 

By Gary Tanashian

The following is one of a wide range of analytical topics covered in NFTRH 293′s 35 pages this week, much of which is straight ahead technical analysis. But the T Bond market is usually central to an overall macro view at any given time. This segment is not meant to provide actionable direction (other than perhaps to prepare for a potential rise in T bonds yields), it is meant to dig into the mechanics beneath the financial markets in an effort to have people consider that there is much more going on with markets than simple nominal TA or conventional fundamental analysis (PE ratios, growth metrics, reported economic data, etc.) can account for.

US Treasury Bonds


10 & 30yr yields have declined to support as NFTRH projected

Yields on long-term Treasuries have continued to decline in line with our view that was contrary the ‘Great Rotation’ (out of bonds) hype. The [30-year] especially is now close to support and the next play seems like it could be rising yields and declining T bonds.

Our long-term ‘Continuum’ chart; yields approach support

The 30-year ‘Continuum’ view above makes the simple case that players had to be put offside believing in the ‘Great Rotation’ at 4% yields. The nearly half-year decline since then has now satisfied the chart as yields have come to our 3.1% to 3.2% target range, where there is support.

It is interesting that stocks have continued to rise despite declining yields, whereas previously they had been rising with yields. One victim of this phenomenon however, has been a stock market leader, the banks. It is no surprise at all that bank leadership broke down as yields broke down because ZIRP provides in essence free money where they borrow (Fed Funds) and higher long-term yields provides the implied profit incentive, where they package this stuff out to public and commercial borrowers.

Moving on, we’ll close with the 10yr vs. 2yr yield curve with gold juxtaposed in the background.

It continues to be in the realm of possibility if not probability that the gold community’s trials and tribulations of the last 2.5 years has been fully earned as the most vocal boosters of the metal looked like utter geniuses in 2004 through 2007 when gold went up while the curve went down and we might add, gold went nowhere vs. commodities (ref. Gold-CCI on page 21).

That was a time when the fundamentals for gold and the gold stock sector were ‘not good’ and ‘flat out awful’, respectively. That is because it was a time of economic expansion, not deceleration.

So tell me now Bueller, does the ongoing 2.5 year precious metals bloodbath make sense given that the economy is working relatively as current policy wants it to? Yes, it does make sense.

There is hype in the financial media about how a flattening curve is bad for stocks and the economy, but this chart puts a lie to that lazy analysis. The analysis claims that the curve is still elevated (nice understatement) and thus there is little to worry about.

A flat yield curve worked well enough in the secular bull into 2000, when the situation began to change and a rising curve attended the bear market out of the tech bubble. A flattening curve also attended the 2003 to 2007 cyclical bull market. In the post-2000 age of ‘Inflation onDemand’ a sharply rising curve has gone hand in hand with unprecedented upset in global financial markets. Most recently however, the curve has dropped in accordance with economic recovery (ref: Operation Twist, which helped kick things off as it pressured short-term yields upward while pressuring long-term yields downward).

Again, much like with the Gold-CCI chart on page 21, if this big picture view breaks down so too must the analysis change to allow for its implications, which would be that a new era of prosperity has been created out of monetary policy. The thing is though, they have not broken down yet so instead, NFTRH stays the course and marvels at these charts showing just how desperate policy has been in its effort to keep the picture intact.


Dow & T Bill rate, long-term relationship


Closer view of the 3 month T Bill rate pinned to ZERO, 5 years & counting | Notes From the Rabbit Hole (NFTRH) | Free eLetter | Twitter

| Digg This Article
 -- Published: Monday, 2 June 2014 | E-Mail  | Print  | Source:

comments powered by Disqus


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2018 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of, its affiliates or advertisers. makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, is strictly prohibited. In no event shall or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.