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Gold Gets A Boost Of Rocket Fuel From Negative Bond Yields

Published Mon, 24 Jun 2019 14:45:15 -0400 on Seeking Alpha

Ladies and gentlemen, we have liftoff!
After breaking out of a five-year trading range, the price of gold surged above $1,400 an ounce last week for the first time since 2013 on expectations of a U.S. rate cut. The 10-year Treasury yield fell to around 2 percent, its lowest level since November 2016. Meanwhile, the pool of negative-yielding government bonds around the world hit a fresh record high of $13 trillion.

Gold "may finally be off the leash," Bloomberg's commodities columnist David Fickling wrote last Thursday after the yellow metal rallied above $1,350, a number that for the past six years has filled gold bulls with "dread." Last week, I shared my belief that gold would continue to rally if it broke above that key resistance level. Like billionaire hedge fund manager Paul Tudor Jones, I believe gold can now make it as high as $1,700 an ounce "rather quickly" as more generalist investors decide to participate.
And even if gold's price did hit $1,700, it would still be well within its DNA of volatility. The truth is that it's a non-event for gold to go plus or minus 20 percent over any rolling 12-month period.
Lower yields have reportedly caught many analysts by surprise. In January of this year, not a single economist among the 69 surveyed by the Wall Street Journal predicted that yields would drop below 2.5 percent by June. The average forecast had been closer to 3 percent.
Some market-watchers are now looking to 1 percent yields. Writing for... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
IAMGOLD 3.33   0.0 -0.21 0.00 7.33
YAMANA GOLD 3.30   0.0 -0.14 0.04 0.60
HECLA MINING 1.90   0.0 -0.25 0.01 0.52
ELDORADO GOLD 8.67   0.0 -2.27 0.00 0.00
SPDR GOLD TRUST 141.32   0.0 0.00 0.00 0.00


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