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If TIPS Yields Go Negative, Gold Rally Likely Continues

byAdvisorAnalyst
July 15, 2016
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If TIPS Yields Go Negative, Gold Rally Likely Continues

by Eric Bush, CFA , Gavekal Capital

10-year TIPS yieldĀ brieflyĀ went negative last week andĀ theĀ current yield is just 3 bps. TIPS yields have fallen around 75 basis points since the beginning of the year. This declineĀ in yield has been accompanied by a rally in gold from $1060 to $1342. One of the more persistent relationships in the market place since 2003 has been this negative correlation between TIPS yields and gold prices. If history is any guide TIPS yields will probably be negative if gold rallies above $1400.

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Copyright Ā© Gavekal Capital

 

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