10-Year Yield Is Breaking Out

The 10-year yield is breaking out today rising 12.5 basis points to 4.061%.

The 1-year yield is only up by 5.7 basis points today to 5.469%.

It is way too early to know for sure if this is the beginning of normalization, but the 10-1 year yield spread is up by 6.8 basis points today to -1.408%.

Not surprisingly, the Gold/S&P 500 Ratio is up by 0.74% today to 0.43373 after bottoming last week at 0.42977.

Again, it is way too early to know for sure if the big move higher in the Gold/S&P 500 Ratio is imminent, but if the 10-1 year yield spread continues to normalize in the days/weeks ahead... the Gold/S&P 500 Ratio will explode higher by the most since the 1970s!

Although gold is down slightly today and the Gold/S&P 500 Ratio is rising from the S&P 500 declining more than gold, a normalization in the yield curve from the 10-year yield going higher is something that nobody is expecting or positioned for and IF this continues (it is way too early to know for sure) it will be similar to the 1970s when gold made its largest upward move in history.

Having the yield curve normalize by the 10-year yield going higher is something that NIA has speculated about several times in recent weeks at a time when nobody else has even mentioned this possibility. Over the last twelve months, the iShares 20+ Year Treasury Bond ETF (TLT) has seen massive fund inflows of $21.495 billion vs. SPDR Gold Trust (GLD) seeing significant fund outflows of -$5.903 billion.

Despite this, compared to one year ago... GLD is up by 4.38% vs. TLT down by 10.62%!

If the 10-year yield continues higher investors will be forced to dump TLT and load up on GLD, which will rapidly send gold to new all-time highs!