Gold Loves the Mother of All Doves

Takeaway: Dollar Down + Rates Down = Heaven for Gold.

Is it time for Janet "Mother of All Doves" Yellen to abandon the Fed's dual mandate and just target rates? The Dollar definitely thinks so. It's down again this week after losing -0.8% of its value last week. Meanwhile, commodity #InflationAcclerating continues to front-run the probability of a devaluation.

 

Gold Loves the Mother of All Doves - doll9

 

Sure, it might be good for a low-volume pop in stocks. But it's horrible news for US consumption growth.

 

Here's a simple formula: Dollar Down + Rates Down = Heaven for Gold.

 

That’s why we are bullish on Gold (see our full research note recapping why from yesterday). What was once TREND resistance of $1272 in our model for Gold is now support. 

 

We will keep adding to the "Gold-Bond" asset allocation move if Yellen targets rates.

 

Gold Loves the Mother of All Doves - drake 

 

Incidentally, do you know who else got away with targeting rates? #Japan. 2013’s Hedgeye TREND support for the 10-year US Treasury yield is now resistance at 2.80%.

 

Maybe she wants a 0.6% JGB-style 10-year?

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