Hedge funds are jumping back into gold… What about you?

From Frank Holmes of Frank Talk:

At the same time, there are some early warning signs of potential economic turbulence on the horizon. I would highly urge investors to ensure a portion of their portfolio is in a historically reliable store of value – investment-grade municipal bonds, for instance, and gold bullion and gold mining stocks.

One of the indicators some economists have their eye on right now is what’s known as the flattening yield curve – or the difference between long-term and short-term Treasury yields. When the latter exceeds the former, the yield curve is said to invert, and in the past this has often preceded an economic slowdown.

Recently, the difference between the 10-year and two-year T-note dropped below 50 basis points for the first time since October 2007. And with interest rates expected to be hiked three or four times this year, the yield curve could very well flatten even further.

It could be for this reason, among others, that we’ve seen a huge jump in hedge funds betting on gold. According to Kitco News, citing Commodity Futures Trading Commission (CFTC) data, money managers increased their speculative long positions in gold futures by 34,928 contracts to a total of 183,080 for the week ended March 27. This represents the most significant jump in bullish sentiment in two years.

Investors’ attention is “back on gold,” George Gero, managing director with RBC Wealth Management, told Kitco. He added: “The gold market has solid geopolitical underpinnings”…

Continue reading at Frank Talk…

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