Share Price Discussion, page-253

Just a few points regarding gold. Over the past few months we are seen a decent rise in the 10 year...


Still negative in terms of real rates, though gold being a monetary metal is tied more so to yields rather than inflation expectations. We have seen commodities across the board do better given they are tied to rising inflation rather than rates. Also explains Silver as being more resilient given it has both Monetary and Industrial purposes.

Gold is however closely tied to the money supply. Many will argue inflation wont surge until Velocity picks up though history shows us (the 1940's) this is not the case. Velocity just needs to stop declining. As we know Money supply has gone through the roof.

  So a softer yield on the 10 year and an uptick in Velocity (which already appears to be happening) should propel gold much higher. Not sure if the FED is running some experiment currently of letting yields rise as inflation expectations have risen. I do think they will get more aggressive sooner rather than later and implement more YCC, which they are subtly doing now through 80 billion of treasury purchases per month.

Regardless the sentiment of a falling DXY seems be subsiding and alot more in the camp of a rising 10 year. Could be perfect fuel for a drop in the 10 year back below 1% and let gold rip.