Gold ended the week down $21.40 per ounce, closing at $1,292, as it continued to remain around the $1,300 level. Prices are still on track for its second quarterly rise, as the dollar dropped following weaker-than-expected U.S. consumer spending.
Last week, the 10-year Treasury interest rate hit its lowest level since 2017, falling below the short-term 3-month rate for the first time since 2007. This relationship is called an inverted yield curve (see the following chart).
An inverted yield curve is considered a dependable indicator of a coming recession, having preceded every U.S. recession in the last 50 years, giving only one false signal during that time period. This development is causing many investment professionals to suggest moving assets from equities to gold.
From Goldline: A top performing hedge fund advises owning gold right now as it projects a recession and a bear market in stocks this year.
“Buy gold and sell stocks is the ‘trade of the century’ advice that one of the best-performing hedge funds of 2018 is giving out to its clients.
“We believe that long gold in CNY terms versus short global equities today could be the macro trade of the century!” according to Crescat Capital LLC.”
Rick Andrews is president of Avant Capital Management