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Is there a relationship between the price of gold and the Japanese 10yr Treasury yield?

cohodkcohodk Posts: 18,493 ✭✭✭✭✭
edited June 21, 2022 3:43AM in Precious Metals

I know, another question. :)

Excuses are tools of the ignorant

Knowledge is the enemy of fear

Comments

  • VanHalenVanHalen Posts: 3,770 ✭✭✭✭✭

    What does a Japanese 10yr Treasury yield these days?

  • derrybderryb Posts: 36,018 ✭✭✭✭✭
    edited June 21, 2022 6:57AM

    weak Yen (and Euro) = Stronger dollar index = lower gold price

    Inverse relationship between Yen and dollar index
    Inverse relationship between dollar index and gold price

    I know, another answer

    "Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

  • derrybderryb Posts: 36,018 ✭✭✭✭✭

    Yen insurance doing its job.

    "Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    Question wasnt about the yen, it's about the yield on 10 year japanese treasury.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,018 ✭✭✭✭✭

    you mean the one denominated in Yen?

    "Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    We'll revisit this in a few months. Then I'll laugh at your ignorance again. And I'll tout my narcissist self. ;)

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,018 ✭✭✭✭✭

    There is a relationship between gold and any other financial instrument. Gold is simply a currency that cannot be created out of thin air. Since 2008 gold has shown an inverse relationship with bonds issued by any country (including Japan) that have recklessly increased their money supply.

    "Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    @cohodk said:
    We'll revisit this in a few months. Then I'll laugh at your ignorance again. And I'll tout my narcissist self. ;)

    Sometimes I even amaze myself. Lol.

    Hahaha
    🤣🤣🤣

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,265 ✭✭✭✭✭
    edited December 20, 2022 4:19PM

    If Japan has decided to let their 10 year Bond float, does that not mean that because of their huge debt overhang - in order to be competitive their interest rates will begin to seek a much higher level?

    That being the case, won’t that force every other bond issuer to hike their rates in their own currency’s race to the bottom?

    And, if this becomes a competition per se’, will this not cause gold and every other precious metal to rise, then to spike?

    Yes, I’d say that there is an indirect relationship. Got gold? Better yet, physical silver?

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • derrybderryb Posts: 36,018 ✭✭✭✭✭

    I'm sticking with my previous opinion dated June 26. With bonds in the outhouse gold should shine.

    "Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    @jmski52 said:
    If Japan has decided to let their 10 year Bond float, does that not mean that because of their huge debt overhang - in order to be competitive their interest rates will begin to seek a much higher level?

    That being the case, won’t that force every other bond issuer to hike their rates in their own currency’s race to the bottom?

    And, if this becomes competition per se’, will this not cause gold and every other precious metal to rise, then to spike?

    Your premise is flawed.

    What are rates on sovereign debt in each major economy?

    What is this competition you contend?

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,265 ✭✭✭✭✭

    What part of my premise is flawed?

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    @jmski52 said:
    What part of my premise is flawed?

    All if it.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • dcarrdcarr Posts: 7,888 ✭✭✭✭✭

    @cohodk said:

    @jmski52 said:
    What part of my premise is flawed?

    All if it.

    Your contention is worthless without any explanation to back it up.

  • jmski52jmski52 Posts: 22,265 ✭✭✭✭✭

    He never explains his contentions.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    @jmski52 said:
    He never explains his contentions.

    You never answered my questions. For if you did, you would realize why your premise is flawed.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,265 ✭✭✭✭✭

    You never answered my questions. For if you did, you would realize why your premise is flawed.

    Anyone here can scroll up to see that you asked zero questions regarding my reasoning.

    You ALWAYS seem to try to put the onus on someone who disagrees with you, hoping to make them do all of the work so that you can try to pick apart their statements.

    Which is exactly why debating you is really pointless.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    No....you put the onus on yourself. I simply ask you to explain yourself. And invariably, you never can. That's because you would rather regurgitate propaganda or radical talking points. You really don't understand the relationships among different markets. You carry very jaded and contemptuous opinions. You are the one who is close minded and incapable of discussion, except among other jaded and contemptuous folk.

    The burden of proof is ALWAYS on the one who brings forth the contention.

    Now this is all good and is what makes the world go 'round, but don't be surprised when your thought process is questioned.

    I simply asked you why a rise in Japanese rates would force other countries to raise theirs. Why would the US, at a 4.5% fed funds rate, be forced to raise rates if the rate in Japan is still only at 0.25%?

    Then you began to talk about currencies. How has the Japanese yen done over the last year? Maybe you should take a look again at that race you so contend.

    So when one makes an incorrect assumption, then bases other ideas and opinions off that incorrect assumption, their premises will be all wrong.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,265 ✭✭✭✭✭

    The performance of the Japanese yen for the past year has no bearing on what happens after they totally changed their interest rate policy. Why would you believe that it does? I suggest that you watch what happens to Japanese bond yields now.

    My premise is clearly stated.

    You've still not bothered to explain where my reasoning is so wrong.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭
    edited December 29, 2022 4:18PM

    @jmski52 said:
    The performance of the Japanese yen for the past year has no bearing on what happens after they totally changed their interest rate policy. Why would you believe that it does? I suggest that you watch what happens to Japanese bond yields now.

    My premise is clearly stated.

    You've still not bothered to explain where my reasoning is so wrong.

    You are so jaded and contemptuous that you wouldn't accept another's view anway, as evidenced by your comment. Maybe you should see for yourself what the yen did about 8 days ago. But you won't, because you don't know how or don't care. If you really want to know, you would try to answer the questions I proposed. Your desire for ignorance is why you are so manipulatable.

    But this thread isn't about the yen, its about JGBs.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,265 ✭✭✭✭✭
    edited December 29, 2022 7:27PM

    I responded directly to your post, you said my reasoning is flawed - all of it - but you still won't explain why, nor have you stated your own view.

    It's almost impossible to guess what your point might be.

    Is there a relationship?

    Is there no relationship?

    Why are you so reluctant to state your position?

    And who's being contemptuous when you diss my answer to your question, but won't even provide your own reasoning?

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • GoldminersGoldminers Posts: 3,560 ✭✭✭✭✭

    Here are 25-year charts of the Japanese 10-year bond and the gold price. Draw your own conclusions.


  • GoldminersGoldminers Posts: 3,560 ✭✭✭✭✭

    And it looks like the Japan bond yield is headed higher. Losing control of the so-called caps.

  • GoldminersGoldminers Posts: 3,560 ✭✭✭✭✭

    And these Japanese interest rates are rising in spite of huge bond buying trying to keep them low by their central bank.

  • TwoSides2aCoinTwoSides2aCoin Posts: 43,758 ✭✭✭✭✭

    There's always a relationship between real money and paper, even as it is manipulated into the future.

  • derrybderryb Posts: 36,018 ✭✭✭✭✭

    "Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

  • GoldFinger1969GoldFinger1969 Posts: 1,165 ✭✭✭✭
    edited February 12, 2023 9:14AM

    You have to separate causation and correlation, as they say.

    The Japanese Yen Carry Trade has been a staple of global finance for decades, certainly before rates were at rock-bottom levels in the U.S. and Europe. With rates there having risen bigtime, Japan is looking once again like the place to borrow.

    Rising Japanese 10-year rates coincided with rising gold prices in recent months...the REVERSE of a years-long inverse relationship. That's NOT unusual -- at a certain point in time, certain relationships no longer hold (think Einstein's Special Theory of Relativity and time/speed :) ). Or remember how U.S. stocks used to track bond prices (inversely to bond yields) for DECADES....and then around 2008 the relationship changed because rates that were too low reflected really bad economic problems and/or systemic risks.

    Right now, Japan is tighening also but rates there are still much lower than most other developed countries. We'll have to see how it shakes out; normally I'd say that rising bond yields are a negative for gold but if the underlying reason for the rise is inflation/GDP growth, that could be a positive.

    There are so many variable at play with gold -- unlike other asset classes -- it's really tough to gauge their combined effects for a straight-out prediction as they can all change on a whim: real rates...nominal rates....stock market action....bond yields in the U.S., EU, Japan, China...systemic risks....Central Bank buying/selling....institutional buying/selling....ETFs.....retail usage (jewelry)....retail speculation.....foreign demand (India)....etc.

  • derrybderryb Posts: 36,018 ✭✭✭✭✭

    Jim Rickards explains why long term US treasury bonds are a good buy:

    "Long-term US Treasury notes are an excellent value. The key to evaluating value in Treasury securities is not based on the dollar losing or gaining value. It’s based on the yield-to-maturity on the note relative to inflation. Here are some facts you need to know: Treasury securities are referred to by maturity. Securities with maturities of one year or less and called Treasury bills. Securities with maturities of greater than one year up to twenty years are called Treasury notes. Securities with a maturity of thirty years are called Treasury bonds. Do not use the phrase “Treasury bonds” to refer to all Treasury securities because the maturity differences are highly material to investment performance. Generally speaking, the longer the maturity, the greater the volatility and the lower the liquidity. Thirty year bonds are OK for some portfolios but generally they are purchased by insurance companies, pension funds and other institutions looking to match long-term assets against long-term liabilities such as death benefits and retirement income. They’re not necessarily suitable for individual investors. We’ll confine this discussion to notes in the 2-year, 5-year, and 10-years maturities. The dollar may lose value due to inflation, but Treasury notes can still provide significant gains in two ways. The first is if the yield-to-maturity is greater than the rate of inflation. If you have a yield of 4% and inflation is 2% then your real return is positive 2%; (4 – 2 = 2). Right now inflation is higher than the yield on Treasury notes so the real return is negative. However, inflation is coming down fast, so you have to consider what inflation will be over the life of the note. If you can lock in a 4% yield now and inflation drops to 2%, then your return is positive even though the dollar is losing value. The other way to make money is if yields drop on the note itself. If future 10-year notes have a yield of 2% and you buy a note today with a 4% yield, then you will have capital gains on your note. (Investors will pay a premium to buy your 4% note in a world of 2% market rates). Of course, every investment has risk. There is almost no credit risk in a Treasury note, but you do have market risk based on inflation and the level of interest rates. In my view, a 4% yield on a 10-year note today will look quite attractive in the months ahead as interest rates drop and inflation comes down. Of course, if interest rates rise then you would suffer capital losses. The point is that inflation (the dollar losing value) cannot be considered in isolation but must be considered relative to the yield on the note and future rates of interest and inflation. If you want less risk and less volatility than the 10-year note, you can consider 2-years notes and 5-year notes."

    "Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

  • GoldminersGoldminers Posts: 3,560 ✭✭✭✭✭

    TIPS or I-bonds offer some protection if you want government paper.

    I would not even consider buying a long bond at 4% as you could be stuck with major capital losses by future inflationary money printing that will be required to service the ever-increasing debt.

  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    @derryb said:
    Jim Rickards explains why long term US treasury bonds are a good buy:

    "Long-term US Treasury notes are an excellent value. The key to evaluating value in Treasury securities is not based on the dollar losing or gaining value. It’s based on the yield-to-maturity on the note relative to inflation. Here are some facts you need to know: Treasury securities are referred to by maturity. Securities with maturities of one year or less and called Treasury bills. Securities with maturities of greater than one year up to twenty years are called Treasury notes. Securities with a maturity of thirty years are called Treasury bonds. Do not use the phrase “Treasury bonds” to refer to all Treasury securities because the maturity differences are highly material to investment performance. Generally speaking, the longer the maturity, the greater the volatility and the lower the liquidity. Thirty year bonds are OK for some portfolios but generally they are purchased by insurance companies, pension funds and other institutions looking to match long-term assets against long-term liabilities such as death benefits and retirement income. They’re not necessarily suitable for individual investors. We’ll confine this discussion to notes in the 2-year, 5-year, and 10-years maturities. The dollar may lose value due to inflation, but Treasury notes can still provide significant gains in two ways. The first is if the yield-to-maturity is greater than the rate of inflation. If you have a yield of 4% and inflation is 2% then your real return is positive 2%; (4 – 2 = 2). Right now inflation is higher than the yield on Treasury notes so the real return is negative. However, inflation is coming down fast, so you have to consider what inflation will be over the life of the note. If you can lock in a 4% yield now and inflation drops to 2%, then your return is positive even though the dollar is losing value. The other way to make money is if yields drop on the note itself. If future 10-year notes have a yield of 2% and you buy a note today with a 4% yield, then you will have capital gains on your note. (Investors will pay a premium to buy your 4% note in a world of 2% market rates). Of course, every investment has risk. There is almost no credit risk in a Treasury note, but you do have market risk based on inflation and the level of interest rates. In my view, a 4% yield on a 10-year note today will look quite attractive in the months ahead as interest rates drop and inflation comes down. Of course, if interest rates rise then you would suffer capital losses. The point is that inflation (the dollar losing value) cannot be considered in isolation but must be considered relative to the yield on the note and future rates of interest and inflation. If you want less risk and less volatility than the 10-year note, you can consider 2-years notes and 5-year notes."

    Rationalism has returned!!!!

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,265 ✭✭✭✭✭

    Note the definition of bond.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    @jmski52 said:
    Note the definition of bond.

    Just like recession.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,265 ✭✭✭✭✭

    Securities with maturities of one year or less and called Treasury bills. Securities with maturities of greater than one year up to twenty years are called Treasury notes. Securities with a maturity of thirty years are called Treasury bonds.

    These have been the classical definitions of a teasury bill, a tresury note and a treasury bond for at least the past 40 years. Not the revisionist definitions that you are pushing.

    Just like recesssion.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    @jmski52 said:
    Securities with maturities of one year or less and called Treasury bills. Securities with maturities of greater than one year up to twenty years are called Treasury notes. Securities with a maturity of thirty years are called Treasury bonds.

    These have been the classical definitions of a teasury bill, a tresury note and a treasury bond for at least the past 40 years.

    Yup...and all are bonds.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,265 ✭✭✭✭✭

    all are bonds.

    Except for the Treasury Bills and Notes.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • GoldFinger1969GoldFinger1969 Posts: 1,165 ✭✭✭✭
    edited February 26, 2023 11:00PM

    @jmski52 said:
    Securities with maturities of one year or less and called Treasury bills. Securities with maturities of greater than one year up to twenty years are called Treasury notes. Securities with a maturity of thirty years are called Treasury bonds.
    These have been the classical definitions of a teasury bill, a tresury note and a treasury bond for at least the past 40 years. Not the revisionist definitions that you are pushing.
    Just like recesssion.

    Bills are quoted on a discount basis and include paper up to 1 year. Notes have coupons and include the 2-7 year paper. 10, 20, and 30 year paper are called bonds. The big difference is between bills and notes/bonds.

    Notes vs. bonds is somewhat fluid, but 2-7 years is the usual range. The 10-year bond is now the benchmark whereas after WW II it was the 20-year Treasury and corporates....and in the 1980's it was the 30-year bond that the market focused on.

    The duration of the 10-year more closely matches most loans, mortgages, and foreign bond markets.

  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭
    edited February 27, 2023 3:52AM

    @jmski52 said:
    all are bonds.

    Except for the Treasury Bills and Notes.

    They are still bonds.

    And so are Tips and Strips. ;):)

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • blitzdudeblitzdude Posts: 5,289 ✭✭✭✭✭

    I-bonds have been sweet, its a shame the annual limit imposed. THKS!

    The whole worlds off its rocker, buy Gold™.

  • derrybderryb Posts: 36,018 ✭✭✭✭✭

    @blitzdude said:
    I-bonds have been sweet, its a shame the annual limit imposed. THKS!

    a trick I learned: overpay your income taxes with quarterly estimated tax payments. When it comes time for a refund you can apply it to further I bond purchases even if you have maxed out your treasurydirect purchases. Also open a treasury direct account for the spouse. $20K purchases provided $1040 in interest this past year

    "Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

  • GoldFinger1969GoldFinger1969 Posts: 1,165 ✭✭✭✭
    edited February 27, 2023 8:58PM

    @derryb said:
    @blitzdude said:
    I-bonds have been sweet, its a shame the annual limit imposed. THKS!
    a trick I learned: overpay your income taxes with quarterly estimated tax payments. When it comes time for a refund you can apply it to further I bond purchases even if you have maxed out your treasurydirect purchases. Also open a treasury direct account for the spouse. $20K purchases provided $1040 in interest this past year

    The limits should be raised substantially this year or 2024. It was part of the deal for the SECURE 2.0 Act's anti-IRA provisions that upset many.

  • cohodkcohodk Posts: 18,493 ✭✭✭✭✭

    @derryb said:

    @blitzdude said:
    I-bonds have been sweet, its a shame the annual limit imposed. THKS!

    $20K purchases provided $1040 in interest this past year

    You loving higher interest rates as well!!

    Now if we can just get that 10yr to 5%!! Or silver to $200. Either will do.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • GoldFinger1969GoldFinger1969 Posts: 1,165 ✭✭✭✭

    @cohodk said:
    Now if we can just get that 10yr to 5%!! Or silver to $200. Either will do.

    I doubt the 10-year is going to 5% unless inflation resumes for a few months straight. Fed Funds at 6% is more likely.

    As for silver at $200..... :)

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