Peter Brimelow Asks If Gold Has Turned The Corner

In his latest Marketwatch column, Peter Brimelow says goldbugs are drawing optimism from the latest Treasuries sell-off.

At JSMineSet, Dan Norcini stressed on Friday evening:

“The big development in today’s market session was the breakdown in the long bond…bonds have been carving out a 5-week old sideways trading pattern… the longer a market runs in a sideways pattern, the more significant the breakout tends to be when once it occurs…In the case of the bonds, the breakdown was to the downside. I should also note that volume on the sharp move lower was very heavy, always a good sign that the move is legitimate.”

Australia’s The Privateer was even more direct on Saturday in a commentary cheerfully entitled, “Look At Those Treasuries Go!”

“Regardless of anything else going on around them, the yield on Treasury paper is inexorably rising and the pace of that rise is accelerating….As The Privateer has pointed out MANY times, the REALLY BIG bull markets in precious metals come when the yield on their ‘substitute’ as money — government bonds — show rising yields and falling prices. The rising yields show an increasing unwillingness to hold them.”

Brimelow also notes that imports to Asia - particularly, mainland China - have shot up recently.


Although that demand will eventually be satiated, it certainly appears insatiable as of now. Increasingly, the fate of the bull market is lying in Asian hands - which are influenced by more robust Asian inflation rates as well as by growing wealth. If inflation cools off there, while going its own way in the more developed world, the metal could have a serious stumble. Thankfully, there's no sign of any such cool-off.