Gold and macro environment, page-94

These charts are a few months old from Crescat Capital.

The 1st chart is in my view a very important chart showing the 2 yr vs 30 yr bond yield gap vs the VIX - as the chart is a few months old so does not include the recent spike in VIX or the recent significant steepening of the of the 2vs 30 year yield curve. Note what happened around the dotcom boom, GFC and pandemic after major steepening moves in the 2 vs. 30-year yield spread - each one coincided with a significant increase in volatility or VIX and major falls in equity indices - this has just started to happen now but how much further will it go? Each one coincided with a major increase in POG over the next few years as my post above shows.

The second chart shows foreign holdings in US equities are at record highs and even a relatively small reduction will send the S&P falling a lot not to mention the $US falling. With the Yen carry trade ended we may see a large fall in foreign holdings of US shares. Foreign holdings may fall a lot!

The third chart shows record low financial stress a few months ago. Note in particular the lows before the dotcom boom, GFC and pandemic and what happened subsequently ie big increase in stress, major fall in share markets and major gold bull markets.

The thing to note is the very low premium for low grade debt which was at historic lows a few weeks ago - can't find the chart I saw a few weeks ago. I do not know if the premium has increased significantly in the last few weeks in the time the VIX has doubled (I expect it has).