The Thesis
When the 2-year Treasury yield rises above the 10-year yield, the bond market is signaling a recession is coming. This has predicted every US recession since 1969 with no false positives.
The Strategy
Entry: Buy gold when the 2s10s spread turns negative
Exit: Sell when the spread normalizes above +0.5%
We buy gold instead of shorting equities because timing the equity sell-off is difficult — the market can rally 12-18 months after inversion. Gold starts moving earlier.
Major Inversions
Key Insight
The yield curve is the bond market's verdict on economic health. The bond market is bigger and smarter than the stock market. When it inverts, listen.