The Gold-Bond Correlation And Other Macro Observations

We wrote many years ago that gold often takes on many personalities at any given time:

Gold is a weird cat with multiple personalities and more than nine lives. The yellow metal is up almost $100 since last Friday’s weak U.S. employment report.

At any given time period gold will assume any one of its multiple personalities based on a fundamental story and trade as: 1) a safe haven; 2) an inflation hedge; 3) a commodity; 4) a store of value against central bank balance sheet expansion; 5) an alternative currency; 6) central bank reserve currency; 7) a diversification asset; 8) an Armageddon hedge; and/or 9) all of the above.

   –  Global Macro Monitor, June 6, 2012

Add to that, what we have induced through market observation, the potential for a gold-bond tracking risk-on/risk-off algorithm. That is algos programmed to track gold with the bond on an almost daily basis.

The Gold-Bond Correlation And Other Macro Observations