“There’s still a lot of fear out there,” warns one investor as the combination of event risks (e.g. Brexit, Spain, US Election) and the contagious collapse of central bank credibility has asset managers around the world piling into bonds and bullion. With negative rates now de rigeur, global developed market bond yields are pushing record lows as demand for protection from fiat debacles in precious metals (and alternative currencies) has sent money managers long position near Aug 2011’s record highs.
As Fed credibility collapses (red line – inverted expectations of rate-hike-pace) so Gold (gold line) and global developed market bonds (green line) have soared tick for tick…
Having fallen to a net short position as The Fed tried (unsuccessfully) to convince the world it was on a path to normalization, money managers have piled into gold (futures and options) at near record pace…
The last time gold “net longs” were this high was August 2011… from when prices tumbled despite a near doubling of The Fed’s balance sheet…
“There’s more upside risk for gold than there is downside,” Josh Crumb, the chief strategy officer who helps oversee $1.7 billion at Toronto-based GoldMoney, said in an interview in New York. “For gold to fall, they would have to raise interest rates more than the market expects, and I think that’s a very unlikely scenario.”
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