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.
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.
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?
