Left panel: GLD vs TLT
- Not so convincing yet... but look at right panel
Right panel:
- Gold (XAUUSD) spot vs 10y Treasury futures ($ZN)
What do we see?
1. I would not be happy to hold 10 year bonds or any related ETF or other derivative products of US 10y Bonds. Gold already performs a lot better.
2. Of course we have some Heikin-Ashi warning, that Gold/ZN chart (right panel) may pull back to/below 10 ration level, but it is defenately bullish, so model favors holding Gold.
3. one more obvious thing from comparing left panel to right panel: we see the massive 10y/30y flattening of the US curve even from these relative value charts! GLD ETF is a 20 Yrs+ Bond ETF.
That's why we don't yet see Gold outperformance relative to the whole curve.
Final conclusions:
- I want to hold Gold the most!
- I don't want to hold any Stocks
- If I hold US bonds, I don't want to hold anything below 12 years maturity. Then maybe some longer dated cash bonds, or TLT is still OK, but have to be careful with those too!
Thinking in a 3-5 years horizont, a smart investor should hold more Gold in the portfolio. On stocks you have to be very selective, and bonds have to be underweight. This way you may still gain some positive real interest.
If you keep holding stupid 70/30 or 50/50 Stock/Bond portfolios, as most of buy and hold strategists suggest you, then you can suffer serious losses inflation adjusted = neagtive real yield!
- Not so convincing yet... but look at right panel
Right panel:
- Gold (XAUUSD) spot vs 10y Treasury futures ($ZN)
What do we see?
1. I would not be happy to hold 10 year bonds or any related ETF or other derivative products of US 10y Bonds. Gold already performs a lot better.
2. Of course we have some Heikin-Ashi warning, that Gold/ZN chart (right panel) may pull back to/below 10 ration level, but it is defenately bullish, so model favors holding Gold.
3. one more obvious thing from comparing left panel to right panel: we see the massive 10y/30y flattening of the US curve even from these relative value charts! GLD ETF is a 20 Yrs+ Bond ETF.
That's why we don't yet see Gold outperformance relative to the whole curve.
Final conclusions:
- I want to hold Gold the most!
- I don't want to hold any Stocks
- If I hold US bonds, I don't want to hold anything below 12 years maturity. Then maybe some longer dated cash bonds, or TLT is still OK, but have to be careful with those too!
Thinking in a 3-5 years horizont, a smart investor should hold more Gold in the portfolio. On stocks you have to be very selective, and bonds have to be underweight. This way you may still gain some positive real interest.
If you keep holding stupid 70/30 or 50/50 Stock/Bond portfolios, as most of buy and hold strategists suggest you, then you can suffer serious losses inflation adjusted = neagtive real yield!
