Gold always closely follows iShares Barclays TIPS Bond Fund (TIP), which owns U.S. Treasury Inflation-Protected Securities (TIPS). When gold sold off by $75.90 on Friday to settle at $1,564.10 per oz, TIP actually closed at a new 82-month high. Real U.S. 5-Year Yields based on 5-Year TIPS, declined 7 basis points on Friday to -0.44%, its largest single day decline of 2020.
Historically, a huge decline in real yields of 7 basis points in a single day would almost certainly mean that gold made a major gain during that same trading day. For example, on February 24th when Real U.S. 5-Year Yields declined 6 basis points to -0.36%, gold rallied by $27.80 to settle at $1,672.40 per oz.
The fact that gold settled last week at $1,564.10 per oz with Real U.S. 5-Year Yields settling at -0.44%, when gold four days earlier settled at a price that was $108.30 per oz higher despite Real U.S. 5-Year Yields on February 24th being 8 basis points higher at -0.36% is complete insanity!
With TIP trading up today to another new 82-month high, we already know that Real U.S. 5-Year Yields are declining further into negative territory, which is the single most bullish indicator in the world for gold! Gold is already beginning to bounce big and is currently up by $29.40 to $1,593.50 per oz. If Real U.S. 5-Year Yields continue downward, gold is practically guaranteed to explode to $1,700 per oz in the days ahead!
There are many oversold gold mining/exploration stocks and we are currently evaluating the entire gold mining/exploration sector to determine which gold stock is likely to far outperform all others in the weeks ahead!