Contrary to central banks and financial pundits, it is the bond market, rather than the stock markets, which provide the true signals for the strength of an economy and of a currency. And this has never been so true since the world went forward with its credit based monetary system.
Yet in addition to this, the one commodity which also acts as a warning sign for monetary and financial collapse is gold. And it has proven accurate on at least three occasions going back to the 1970's when the precious metal was removed as a backstop for all global currencies.
As we begin the second half of 2016, some interesting events are taking place that go far beyond last week's Brexit vote and possible future ending of the European Union project. First, the number of global sovereign bonds that now have negative yields are at $11.7 trillion, and is a number that is climbing daily. And secondly in the U.S., where the dollar remains the global reserve currency and the U.S. Treasury the most important credit vehicle, yields for treasuries have fallen to their lowest point since the 1950's.
The yield on the benchmark 10-year Treasury note sat lower at 1.004 percent, after hitting their lowest level in four years, according to Reuters. The yield on the 30-year Treasury bond was also lower at 2.241 percent after hitting a new all-time low. - CNBC
U.S. 30-year yield hits lowest in at least 60 years. Treasuries post highest return in 17 months in June * Bond prices pare gains after ISM PMI data beats forecast * Fed monitoring Brexit's impact on U.S. - Fed's Fischer - The U.S. Treasuries market rallied on Friday, with the 30-year yield hitting its lowest since the 1950s in a worldwide scramble for bonds on expectations of weak global growth and more policy stimulus from major central banks. – Yahoo FinanceEven during the 2008 Credit Crisis did bond yields for the 10 and 30 year never get so low, which validates that the world is rushing full on out of their own financial instruments and are willing to take even a smidgeon of return in exchange for a flight to safety.
But as we have seen since January, U.S. bonds aren't the only signal of a move out of stocks and faltering currencies. In fact, gold has been the best performing asset for the entire year, and as more and more geo-political and economic events reveal themselves to place the global financial system on the precipice of collapse, the monetary metal will not only soar past its all-time high, but ultimately be the only true safe haven when even the dollar no longer acts as a currency of strength and stability.