The soaring price of gold is a harbinger of trouble ❗️
Gold breaking new ATHs should be a warning signal for everyone because rising price of gold is historically correlated with trouble for the US economy 〽️
The surge of gold price in 1972 and 1978 preceded destructive waves of inflation, while in 2007, it foreshadowed an economic downturn.
💁♀️ This is all because gold is inversely correlated to interest rates. Investors prefer to buy debt (treasuries) when interest rates offset inflation and gold when interest rates are too low to compensate for inflation.
Rising gold prices suggest that investors are expecting bond yields to fall as the Fed cuts rates, while the market remains unconvinced that the rapid rise in inflation will not return 😬
