Yield Curve Rapidly Uninverting, Very Bullish for Gold

Less than one year ago on September 29, 2023, NIA sent out an alert highlighting how the U.S. Treasury 10 minus 1 year yield spread was inverted by -90 basis points. NIA created an exclusive chart showing how when the U.S. Treasury 10 minus 1 year yield spread is inverted by -40 basis point or more with a gold price of less than 5% of M2 Money Supply Per Capita, gold averages a gain of 60.56% over the following twelve months.

Gold was $1,848.10 per oz on September 29, 2023, and gold settled yesterday at $2,497.09 per oz. Gold has gained by 35.12% in less than twelve months, but this is actually below the long-term average gold price gain under these conditions.

Gold’s largest short-term gains typically occur in the months following the yield curve uninverting, which is when the recession begins, and gold stocks begin to lead the market as the #1 largest percentage gainers.

On Friday, the U.S. Treasury 10 minus 1 year yield spread returned to above the critical -40 basis point inversion level for the first time since October 2022, which is a sign that the yield curve is getting ready to uninvert and the recession is imminent alongside a massive stampede into the highest quality gold mining/exploration stocks.

Ever since October 2022 when the U.S. Treasury 10 minus 1 year yield spread inverted to below -40 basis points, gold has consistently achieved positive forward 12-month returns, and gold’s forward 12-month returns have been steadily increasing.

NIA has created an updated chart to account for the last 23 months of the U.S. Treasury 10 minus 1 year yield spread being inverted by -40 basis points.

Gold now achieves an average forward 12-month gain of 49.07% under these conditions. From gold’s Thursday settlement price of $2,509.55 per oz (the most recent day meeting these conditions), a forward 12-month gain of 49.07% would result in gold reaching $3,741 per oz by this time next year.