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Gold Update: TIPS Bond Demand Points At Inflation

|Includes: SPDR Gold Trust ETF (GLD)

Gold investors have not been doing good lately, but there is light at the end of the tunnel.

The 10 year bond yield has been rising from 1.8% to 2.4% since the election, but 10 year TIPS yields have only been rising from 0.14% to 0.45%. So that means there is more demand for TIPS bonds than for normal bonds.

People buy TIPS bonds to hedge against inflation, so I expect there will be a higher inflation rate going forward.

The CPI has been consistently rising year over year.

If the CPI rises faster than bond yields rise, then that would be good for gold. And it looks like the blue line here (TIPS yield) is trending to the downside, which means the red line (gold price) will be rising.

The COT report for this week was bullish for gold. Managed money shorts have been rising and commercials have been covering their shorts. At this rate I will be buying gold end December-January.

Silver is less bullish, but will eventually follow where gold is headed.