5% Treasury Yields Signal a Peak in Gold and Silver Prices

Gold and silver prices have reached historic highs, but according to Mike McGlone, senior commodity strategist at Bloomberg Intelligence, this is not a good time to buy them. The 10-year Treasury yield has climbed back to around 5%, its highest level since 2000, making it difficult for non-yielding assets like gold and silver to compete.

The historical conditions that made metals attractive in 2020 have inverted. At that time, the 10-year Treasury yield was near 0.5% and the Federal Reserve was cutting aggressively. Now, with yields at 5%, holding gold or silver above $4,300 comes with a significant opportunity cost.

McGlone points out that the gold-to-bond ratio, which was around 30 in 2020, is now elevated and no longer indicates a buy signal. This inversion suggests that metals may not be as attractive as they seem.