Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi James and MM team, Thanks for new website and I found podcast with Peter O'connor very informative. From your discussion with Peter, am I to take it that gold (and related equities such as NCM, NST, GOR, and EVN are beneficiary of the expected rising bond yields? (Not looking for comment on these individual stocks). Banks will also benefit? Thanks Alain
Hi Alain,
There are many factors that will influence the price of gold which Peter and I discussed in the video:
Gold generally moves in the opposite direction to interest rates because investors who hold gold are foregoing the yield from cash in the bank but also its got the reputation as being a great hedge against inflation and volatility, both of whom we expect to rise in the years ahead.
However our foray into the sector this week was primarily motivated by MM’s view that bond yields have rallied too far, too fast, and a decent pullback was likely which should help gold recover towards $US2,000/oz, we don’t expect this to be a long-term position.
Unlike gold banks love rising bond yields because it flows through to increased margins, hence the sector both locally and overseas has boomed in 2021.
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