Sometimes commodity. Sometimes currency.
Sometimes hedge on Central Bank distrust. Sometimes outright fear trade.
Sometimes hedge on inflation. Sometimes alternative store of value during deflation.
Gold is also now a beneficiary of negative interest rates and here’s why:
How does one "play" negative yields. Consider this chart.
Why does this work? Because gold has a zero yield meaning it is now a high yielding alternative. pic.twitter.com/tavG0QPEZi
— Jim Bianco biancoresearch.eth (@biancoresearch) August 16, 2019
It’s hard to believe Gold can move significantly higher after it’s recent run this year… until you see these next few charts:
By inference, Gold can continue higher as SPX sells off (or consolidate here as SPX sells off).
There is also a correlation that USDJPY will break lower forcing the Japanese Yen higher.
And here’s the Yen in escape velocity mode as I projected in my DailFX Interview June 6th!
An intensifying currency war as well as the heightened risk of a global recession are also solid reasons for the continued buying in Yen and Gold. What would not be is a reversal in rates (higher) pulling US Dollar (higher) with them. However, given the growing efforts by Navarro and Trump to talk the USD down, insomuch as suggesting Treasury intervention to devalue the USD in order to better compete on the global trading stage, there could be even more impetus to own gold, silver, miners and associated currencies like Yen as these above charts suggest.