Chart 3: Gold Futures - Weekly


Source: QST


IS GOLD THE SAFE-HAVEN OF LAST RESORT? Higher prices for gold took place despite a plethora of negative influences, foremost of which is government debt yields around the world that remain high as investors anticipate interest rates will remain elevated due to persistent high inflation levels. Since gold pays no interest, except for special central bank leasing arrangements, interest bearing assets, especially in a time of high interest rates, such as government debt issues, attract capital at the expense of gold. In spite of this relationship, the price of gold has spiked higher.


Something very unusual has taken place with the flight-to-quality vehicles recently. Any time a market cannot rally on bullish news, as appears to be the case for the 30-year Treasury bond futures and the U.S. dollar, it could be a sign of deeper seeded deteriorating fundamentals that lie below the surface. The 30-year Treasury bond futures and the U.S. dollar could only muster a temporary price advance. It appears that U.S. Treasury notes and Treasury bonds, and the U.S. dollar are not the flight-to-quality vehicles that they once were. This leaves the yellow metal, by default, as the shining flight-to-quality vehicle (Chart3).


Gold appears to be the most pureplay flight-to-quality vehicle now and the most haven of the safe-haven assets.


Alan Bush E: alan.bush@admis.com


15 | ADMISI - The Ghost In The Machine | Q4 Edition 2023


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