Gold fell on Monday because bond yields went up. That's the headline. That's also the entire investment thesis of every precious metals trader who just lost money.
Here's what happened. Treasury yields rose. Gold doesn't pay interest. Bonds do. Investors did math for the first time in months and sold their shiny rocks to buy pieces of paper that generate income. Silver also collapsed because it follows gold around like a desperate younger sibling.
The phrase "non-yielding precious metals" is doing heavy lifting here. It's a polite way of saying you bought an asset whose entire value proposition is looking pretty in a vault while you pray for societal collapse. Bonds pay you to own them. Gold costs you money to store. One of these is an investment. The other is a doomsday hobby with a ticker symbol.
Retail traders who bought gold at the top spent Monday explaining to their spouses why their inflation hedge dropped faster than the inflation rate. They'll blame the Fed. They'll blame manipulation. They'll blame JPMorgan. They won't blame the fact that they bought a rock because a guy on YouTube told them the dollar was finished.
The technical setup was screaming for this move. Gold had gone parabolic on nothing but vibes and central bank buying. Every oscillator was pinned. Every momentum indicator was flashing red. Every chart pattern was begging for a reversal. And retail kept buying because someone told them it was going to ten thousand dollars an ounce.
Silver lost even more because silver always loses more. It's the official metal of people who thought gold was too mainstream. Congratulations on your contrarian investment strategy. The market noticed your conviction and charged you extra for it.
Photo by Dash Cryptocurrency on Unsplash
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