• 31 mins SEC Crackdown On ICOs Leads To New Lawsuits
  • 3 hours What’s Behind China’s Tightening Grip On Global Gold Markets?
  • 19 hours Europe’s “Link Tax” Could Kill Its Internet Sector
  • 22 hours Tech Crunch Drags Markets Lower
  • 1 day The Intrinsic Value Of Gold-Backed Cryptos
  • 1 day Stocks Slide Sideways As Uncertainty Mounts
  • 2 days The Real Estate Reality Of America’s New Boom Cities
  • 3 days Most Americans Don’t Have Their Dream Job Just Yet
  • 4 days Buffett Bets Big On Banking Stocks
  • 4 days Gold Miners Face More Bearish Pressure
  • 5 days NATO Hits Up Startups For Tech Evolution
  • 5 days Italy’s Budget Defiance Sends Bond Yields Soaring
  • 5 days Iran Turns To Crypto As SWIFT Cuts Off Central Bank
  • 5 days Chinese Gold Demand On The Rise
  • 6 days IMF Calls On Central Banks To Consider State-Backed Crypto
  • 6 days Why Are Wall Street Banks Fighting Over Gamers?
  • 6 days An Army Of ‘Verified’ Twitter Accounts Is Promoting Bitcoin Scams
  • 6 days New A.I. Virtual Assistant Gives Traders An Edge
  • 7 days How To Play The 5G Revolution
  • 7 days China’s “Singles’ Day” Sees $31 Billion In Sales
EU Weighs New Payment System With Iran To Skirt U.S. Sanctions

EU Weighs New Payment System With Iran To Skirt U.S. Sanctions

Demonstrating its eagerness to continue…

Saudi Stocks Plummet As Foreign Investors Bail

Saudi Stocks Plummet As Foreign Investors Bail

The death of journalist Jamal…

  1. Home
  2. Markets
  3. Other

Traders: Sell Stocks and Bonds - Buy Gold and Silver

With consideration to our variant methodologies for establishing a context for the downtrend in long-term yields, we believe the move has reached the dregs of the trend. Over the past year, we've posted the following 10-year yield charts ad infinitum, with the idea that long-term yields were poised to retrace a significant portion of the move that had reached a relative performance extreme at the end of 2013.

TNX 10 Year Yields shown over 50 Years
Larger Image

10 YR Yields 2009-2014 and 10 Yr Yield 1979-2984 (inverted)
Larger Image

 

10 Yr Yields 2013-2014 and 10 Yr Yields 1994-1995 (Daily)
Larger Image

Last Friday, 10-year yields closed just 2 basis points higher (1.68%) than the May 1, 2013 close - which served as the power low for the subsequent taper-tantrum. From our perspective, the risk/reward for traders long Treasuries here is no longer compelling. Moreover - and as alluded to in recent notes, the significant move by the ECB last month to begin quantitative easing should provide further incentive and traction over an intermediate timeframe away from the safe haven shores of long-term Treasuries.

Upstream, we continue to find constructive action in burgeoning reflationary trends - namely, in gold and silver, that have led what we suspect will become a broader pivot in other downtrodden hard commodities such as oil and copper. We reiterate our call that TIPS look attractive relative to nominal Treasuries, with the more aggressive reflationary trade still found in silver then gold. On the immediate horizon, gold has become vulnerable to completing a quick retracement back to ~$1230, before we see it attempting to break out above its highs from last March and challenging it's first major retracement level above $1400. In either scenario over the next week, precious metals remain one of our favorite positions and would look to increase long-term allocations, primarily relative to U.S. equities - but also now with respect to long-term Treasuries as well.

Overall, the moves from the most recent deflationary scare have continued to follow the exhaustion sequence witnessed at the end of 2008, when a much larger deflationary squall hit the markets and inflation expectations. Despite the sharp retracement in equities this week, we are looking for the SPX to resume its downtrend - with a pivot inverse to what we expect will become a cyclical low in inflation expectations.

2008/2009 Gold/Oil/TIP:TLT/ Copper (Daily)
Larger Image

 

4014/2015 Gold/Oil/TIP:TLT/Copper (Daily)
Larger Image

 

Back to homepage

Leave a comment

Leave a comment