Every time the yield curve inverts the market crashes…every single time.
The chart below shows the 2 year note yield less the Fed Funds rate. The 2 year yield is the market rate driven by fundamentals that changes minute by minute. The Fed Funds rate is managed by the Federal Reserve.
When the curve inverts this shows the Fed Funds rate is too high relative to the underlying slowing economy. An inverted yield curve is a signal of a soon to be coming economic recession.
The curve was inverted in 2001, 2008, 2020 and now. The stock market crashed every single time.
The Fed will react and cut rates and increase their balance sheet.
In 2000, the Fed balance sheet rose from $620 bil to $800 bil over the next few years.
In 2008, the Fed balance sheet more than doubled from $900 bil to $2.4 trillion.
In 2020, Fed assets exploded higher from $4.1 trillion to $8.6 trillion.
The Fed basically doubled their balance sheet during every recession.
This massive surge in USD liquidity increases inflation and vaults gold higher.
The gold price basically doubled every period after the Fed increased their balance sheet.
Gold rose 2.3X in the years following 2000, 2.4X in 2008, and 1.7X in 2020.
It’s not a long shot to believe gold will climb 2X over the next few years as well. GP sees gold at $5,000/oz over the next few years as the supply of USD’s increase pushing inflation even higher.
It’s not a stretch to believe the US economic system has crashed head first into the proverbial long term wall. With public debt rising astronomically to total $35 trillion the USD system is in jeopardy. GP expects inflation to increase as the Fed floods the system. The value of the USD will plummet in value, not necessarily against other currencies, but seen in loss of purchasing power which will accelerate.
You need to protect your assets in these volatile times. Gold has historically been the best way to preserve your wealth and this time should prove no different.
The Golden Portfolio offers two world class two portfolios that explode in value when gold rises. Insulate yourself and your assets from the accelerating financial madness.
Sign up and get on board. It’s going to be quite a ride.
