GoldNuggets — Gold, Fiscal, Bonds
GoldNuggets Digest: global gold breakout, coiling spring in commodities, fiscal tailwinds for gold, gold vs bonds (price), gold vs bonds (valuations)
The GoldNuggets Digest is our weekly publication. It contains "nuggets" of Charts & Research on gold, commodities, and macro —issues and insights which we think will be interesting and useful for investors.
Global Gold Price
I commented a couple of weeks ago with regards to this chart: “I recommend keeping a close eye on gold in the coming weeks because while it could just keep ranging, a breakout (either way) is going to set the tone for the rest of the year and probably into next year too for that matter…“ —and now the tone is set! That’s a clear upside breakout for US$ gold and the global gold price index (and hence a bullish continuation). (source)
Gold vs Commodities
With gold breaking higher, the rest of commodities are basically sitting there waiting as an increasingly tightly coiled spring.
I expect commodities to play catch-up and inflation risk to come online heading into next year (in my view inflation will be the big issue of 2026). (source)
Fiscal Tailwinds
Gold Bull Market = Bond Buyers Strike?
Depending who you ask, some will tell you a key driver of the current bull market in gold is basically a sort of buyer’s strike on treasuries. Partly due to geopolitics (risk of asset freeze) and partly due to fiscal largesse (surging debt/deficit), and a bit of political/policy risk in the USA.
The chart below would appear to lend some weight to the fiscal side of things as US government debt balloons ever-higher. (source)
Gold vs Bonds (price)
Another angle on it is how substantially and relentlessly gold has outperformed treasuries (even with interest included). The run of relative performance in gold vs treasuries ranks among the most significant moves in history.
Gold vs Bonds (value)
As a result of that extended run of outperformance, gold now looks expensive and treasuries look cheap — which is a departure from the usual habit of the two to tread a similar path.
But here’s an interesting thought: you could get a situation where gold continues to trend higher in absolute terms, and treasuries play catch-up and outperform. From a macro standpoint the most likely situation for that would be recession or crisis; triggering safe-haven flows and lower Fed funds rate helping drive bond yields down (or other extraordinary Fed policy moves).
In other words, that would be the defensive angle. I always say on defensives and diversifiers in a multi-asset portfolio; diversify your diversifiers (some gold, some bonds) and diversify dynamically (sometimes more gold, sometimes more bonds) based on the lay of the land. And this land looks interesting…
Surveys: What do you think?
What’s your 1-year outlook for gold:
What’s your 1-year outlook for Treasuries (10-year government bonds):
(n.b. feel welcome to discuss in the comments section)
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What do you reckon about the surveys? (I'm happy to take suggestions for future questions if you think this is a good idea..)
what goes into the TDC valuation metric?