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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (150548)	9/5/2019 1:46:28 AM
From: TobagoJack	1 Recommendation Recommended By marcher Respond to of 217830

random dialogue re gold and stuff ... On 5 Sep 2019, at 1:36 PM, J wrote: Maybe the ETFs are the bad actors? In a sense the ETFs are both paper as well as supposedly physical. Someone cheating and creating unbacked ETFs? On 5 Sep 2019, at 12:44 PM, B wrote: H is right but what concerns me is the gap that has opened between the paper and physical markets. The paper market is on fire but channel checks indicate current demand for physical is lackluster.This is opposite of the paradigm existing the last 8 years. From:H Sent:Thursday, 5 September 2019 12:28 PM Subject:Re: H / B...discussion Q re gold There is a well-established (empirically, and it makes sense from a theoretical standpoint as well) negative correlation between gold prices and real interest rates (a word of caution: gold is a highly sensitive market and tends to lead turns in real interest rates, i.e., in order to time buy/sell decisions one cannot just wait for real interest rates to turn - one must try to anticipate the turns). The best proxy for real rates is the 5-year TIPS yield, which is inter alia driven by market expectations of future CPI. Things are not so straightforward with stocks. While generally speaking one would expect the prices of titles to capital to increase when rates decline, contingent circumstances can shift the relationship completely for very long time periods. There is a fundamental problem with the so-called "Fed model". A company's current value is essentially the sum of all its future cash flows discounted at some rate, but it is not clear why it should be appropriate to use today's level of interest rates to discount cash flows that in some cases will only happen decades from now. Also, empirically the correlation between interest rates and stocks is not always the same. From roughly 1929 to 1968, stocks and bond yields were [positively] correlated. Then a lengthy period of negative correlation began (from approx. 1968 to 1998). Since the Russian crisis of 1998, a positive correlation has prevailed most of the time (yields and stocks rise and fall together). In the past few years (since around 2015) the positive correlation has begun to fray a bit, so that there is actually no particularly strong correlation in evidence. This may be a sign that the long term trend is about to change again. On Wed, Sep 4, 2019 at 4:44 AM C wrote: If truly we go to a negative risk free rate..or even effective zero... then cannot gold have a non-linear jump up? But then equities, some of them may do quite well under certain circumstances. So in that case the recent negative correlation between the two might reverse, and turn positive?