Something Has To Give - Does Gold Go Higher & Bonds Lower?
Posted: Wednesday 6th December 2006 - Gold/Silver & Mining Section
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Steve Saville, an excellent market analyst based in the Far East recently wrote this interesting article below. Saville publishes a very well researched newsletter and is a great stockpicker. We used some of his Gold/Silver picks a few years back and are still sitting pretty.
Check out his www.Speculative-Investor.com and sign up for a Free trial if Gold/Silver and a general contrarian investment view is your bag.
A Reason To Like Gold / A Reason To Dislike Bonds – By Steve Saville
If gold and commodity prices do what we expect them to do over the next 3 months then inflation expectations will ramp upward and the Fed will be forced to resume its rate-hiking early next year. It will be a self-reinforcing trend, with a rising gold price pushing inflation expectations upward and higher inflation expectations fuelling a rise in the gold price. And if this happens it is unlikely that bond futures will move higher or remain near current elevated levels. In fact, if our short-term expectations for gold and commodity prices prove to be in the right ballpark then bond futures will most likely tank over the coming few months.
Something will therefore have to give in the near future. Either the nascent upward trends in the gold and commodity markets will have to come to abrupt ends, or bond futures will have to reverse sharply lower. Our money is clearly on the latter eventuality.
