I hated this trade when it was being reposted every day and now we've all seen why.

gold vs real rates

Correlation does not equal causation.

Gold is a chameleon. Yes, at times it competes with bonds and yield is a factor but it's also a currency. What happened when those diverged?

Russia invaded Ukraine and the west confiscated Russia's foreign sovereign bonds.

It's also the time when the Fed lost control of inflation after long declaring it was transitory.

Now Russia, China and other unfriendly nations with the US have undoubtedly learned there lesson. The bid for gold is surely coming from Asia and most likely China as it sells bonds and buys gold. But not just official sources, gold is highly prized in China and many other countries with capital controls and a history of government instability. There is also something of a rush to gold ETFs in China; how that develops in light of today's strong yuan fix will be something to watch.

The two-day 20 basis point rise in Treasuries along with a hot CPI reading caused a $30 dip in gold but it's now been complete erased. That's another test passed.

Gold
Gold 10 mins

I still don't see a great deal of retail enthusiasm for gold, though the recent rise in silver suggests it's starting. The physical market is also relatively small compared to the vast sums of money flowing through markets now.

Over the past five years, gold has now outperformed the S&P 500 excluding dividends