On gold: It's not a core depression hedge but it's not worthless either. During the Great Depression for example, gold only fell 17% initially, then surged 68% by 1934. So while it's primarily an inflation hedge it does defend capital when policy credibility cracks.
Silver could be worth a speculative position, but that's a spread trade, not core defense with the silver ratio at 80:1.
On Treasuries: We're already in the buy zone. The 2-yr/10-yr has been inverted since July 2022. ISM manufacturing has been below 50 for most of the past 18 months. The key is buying before the Fed pivots.
When it comes to selling I look at these two: First - real yields turning deeply negative (today 10-yr TIPS yield is 2.06% — so nowhere near the danger zone). Second when we get a clear macro bottom plus fiscal spending that steepens the curve.
In a nutshell: long Treasuries are the core holding. Gold's a reasonable 5-10% hedge. Silver's a flyer if you like the ratio play
I went back to re read this strategy. What about buying gold? Silver ratio is currently out of balance, too.
Please explain more of the Treasuries purchase process. What would be the timing to sell the Treasuries?
Hey, great question - let me tackle both.
On gold: It's not a core depression hedge but it's not worthless either. During the Great Depression for example, gold only fell 17% initially, then surged 68% by 1934. So while it's primarily an inflation hedge it does defend capital when policy credibility cracks.
Silver could be worth a speculative position, but that's a spread trade, not core defense with the silver ratio at 80:1.
On Treasuries: We're already in the buy zone. The 2-yr/10-yr has been inverted since July 2022. ISM manufacturing has been below 50 for most of the past 18 months. The key is buying before the Fed pivots.
When it comes to selling I look at these two: First - real yields turning deeply negative (today 10-yr TIPS yield is 2.06% — so nowhere near the danger zone). Second when we get a clear macro bottom plus fiscal spending that steepens the curve.
In a nutshell: long Treasuries are the core holding. Gold's a reasonable 5-10% hedge. Silver's a flyer if you like the ratio play
P.S. as always education, not advice :-)