Flight To Safety Products – 30-Year Treasury Bonds Vs. Gold

2016-03-04 | Taylor Letterman

When it comes to flight to safety products, the 30-year Treasury bond is the top of the list.  Gold has its flight to safety type moments, but gold is a traditional hedge against inflation type product.
On Thursday morning, April Gold traded $1240.60.  Over the next twenty hours, gold traded $35 higher at $1275.90.  I contested that the move in gold was an early indication of a better than anticipated Non-Farm Payroll.  I held a short 30-year short bond futures position through the number.  Estimates were for +195,000.  The actual number was +242,000.


It is lunchtime, and the bond market is trading almost two full points lower.  I am still short with every intention of running this position well into next week.
As I sit here this Friday afternoon, they say the markets are 6-9 months forward-looking.  I think the breakout higher in the gold market this week is an early indication of inflation on the horizon.
And what I know about the bond market is this.  The bond market’s #1 nemesis is inflation.  Keep an eye on the gold market.  The higher it goes, the lower the bond markets go.


We all know markets go down a lot faster than they go up.  The bond market in 2016 has rallied from a low or 15309 to a high of 17026.  The rally lasted a total of six weeks.  The bond market topped out on February 11, 2016.  Three weeks later this market is already trading below it’s 50% retracement.  I think the remainder of Friday we will see the 30-year bond take out their intraday lows at 16120 and fall further.  And then next week is when they hammer it lower.  The bigger they are, the harder they fall.
Lastly…there is the new breed of trader who will include the gold market as a flight to quality product.  That is the difference between someone who thinks they know, and someone like Tony LaPorta with 37 years of market experience.