Gold and Bond Conundrum Signals Something Worse than Inflation

There are a lot of “safe haven” assets. Over the past twelve months some of them have proven their true worth.

For instance, U.S. Government bonds soared as stocks tanked last fall. They have even done well over the past month as more and more investors get worried about the strength of the rally.

Meanwhile, gold, the ultimate safe haven asset and a popular inflation hedge, was hit hard during the credit crunch and has since resumed its strong uptrend.

This creates a very odd situation where bonds, which don’t do well when inflation is high, and gold, which does well when inflation is high, are both doing well at the same time.

The gold/bond conundrum could be signaling something much worse than regular inflation, it could be signaling outright currency debasement.

Dennis Gartman sums it up in I Don’t Like Gold, Bond Rush:

It is a very weird week when you see gold going up and the bond market rallying. One cannot have a warm and fuzzy feeling.

I don't like it when I see gold going higher, but you have to be long [gold].

At Q1 Publishing we agree completely. Of course, we may not see the run-up in bonds holding up, but the one in gold certainly has a lot more room to run.

All of our investment research continues to see massive inflation – with the real potential for currency debasement - ahead. It’s going to be a very good situation where investors buy gold and gold stocks for profit and protection.