Don’t let the new all-time highs in Bitcoin (BTC-USD) distract you. The most important moves are at play right now in gold and utility stocks… and they’re suggesting that we are in the final innings of this bull run. It won’t be long before risk-off behavior returns.
Gold has long been considered a safe-haven asset, one that investors flock to during times of uncertainty or economic turmoil. A rally in gold typically indicates that investors are seeking stability, often due to concerns about the broader market’s health. Gold historically benefits from stock market volatility and tends to move in advance of it.
Utilities, on the other hand, are often seen as a defensive sector. Investors may gravitate toward utility stocks because they tend to offer steady dividends and are less sensitive to economic cycles.
The simultaneous rally in both gold and utilities usually suggests a shift in investor sentiment toward risk aversion. And now, Treasurys are starting to send the same message.
The implications of what’s happening could be really important.
The recent performance of Treasury prices adds another layer to the narrative. Treasurys have essentially been left for dead, with money moving elsewhere. As of today, though, long-duration Treasurys looks like they’re stabilizing… and actually countering equity declines.
Lumber Prices Also Warn of a Stock Market Crash
And what about lumber? Although lumber prices have been holding steady, the market’s greater reaction to the gold price spike is telling. It reflects heightened concerns over economic stability, especially in light of disappointing manufacturing data. The role of the manufacturing sector as a barometer for economic health cannot be overstated. Recent disappointing figures have likely contributed to a revival of risk-off sentiment, as manufacturing is often one of the first sectors to reflect changes in the economic cycle. When manufacturing stumbles, it can be a precursor to a broader economic slowdown.
Investors would do well to keep a close eye on these trends. The interplay between equities, commodities, fixed income, and economic indicators is often where, at the margin, you can start seeing things shifting. We are getting to the point where the warning signs are all starting to flash at the same time.
On the date of publication, Michael Gayed did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
