The Correlation broke but this time Gold left the Safehaven story before the now tremendeously
overbought TLT...
...but when you look at last times when we had these kind of correlation extremes we observe that usually one Safehaven leads down (=> correlations go down) and that when both have corrected the correlation turns up again and both Safehavens start to rise again.
So this would jive well with our TLT view where we could expect the US Long Bond to follow Gold into a severe correction, followed by a joint upturn again. How long will they part ways and when will they reunite, only Mr. Market knows.
The extreme oversold Gold market and the extreme overbought TLT could indicate that this could happen sooner than later. On the hand the correlation has just turned down and could go longer.....
watch the space !!
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