2014 Gold Rally, Inverse Correlation Trend To Stocks & Real Interest Rates
2014 Gold Rally, Inverse Correlation Trend To Stocks & Real Interest Rates
The Two Simple Reasons Gold is Gaining
It's straightforward, so put away your charts of exchange-traded fund flows and forecasts for Chinese gold demand.
Why is Gold (GLD) rallying?
1. Stocks lately are no longer rising at a historic pace.
2. U.S. real interest rates have stopped rising lately, and in fact are in a modest reversal.
Those two trends are the reasons gold is enjoying fresh life during 2014. An investor's view on whether they continue goes a long way informing his or her view on gold.
Commerzbank's commodity strategists put it in a chart today - have a look here:
Gold vs S&P 500 vs Real Interest Rates Chart
[BigTrends.com Editor's note: While there has been some inverse correlation between these assets during the time period depicted on the chart and this is an important trend to be aware of, traders and investors should keep in mind that there is no 'fixed', always-present correlation or inverse correlation between the major investment asset classes such as stocks, bonds, precious metals, oil, currency and real estate.]
Courtesy of Barrons.com