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Eight Capital's Winston Miles explains why gold's inverse correlation with rates has broken
9:33p ET Thursday, October 12, 2023
Dear Friend of GATA and Gold:
The most incisive market letter of the last several months may be the one just issued by Winston Miles, principal and head of institutional equity sales at Eight Capital in Toronto.
Miles' letter explains why the gold price and interest rates lately have broken their traditional inverse correlation, wherein gold falls as rates rise and vice-versa.
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Miles writes: "Between 2007 and 2021, according to Bloomberg, the inverse correlation between the yield on 10-year TIPS and the price of gold registered 91%. And look at the divergence since. The correlation has totally broken. Given where real interest rates are, the gold price should be hundreds of dollars lower. Yet it isn't."
Despite gold's holding up so well, Miles notes, sentiment about the monetary metal and shares of gold mining companies couldn't be worse.
The break in the correlation, according to Miles, involves central banks, and he concludes that gold and gold mining shares now present great opportunity precisely for being so unloved outside central banking.
Miles's letter has some telling charts and a couple of fun illustrations and he has generously allowed GATA to share it with you in PDF format here:
https://www.gata.org/sites/default/files/WinstonMilesLetter-EightCapital-10-2023.pdf
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
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| Attachment | Size |
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 WinstonMilesLetter-EightCapital-10-2023.pdf | 2.14 MB |
