In addition, the bond markets are sending negative signals. Typically, inflationary fears hurt long-term government bonds since interest rates and prices move inversely to each other. In inflationary conditions, central banks will tend to raise interest rates. However, interest rates on long-term bonds have not yet risen. This seems to indicate that short to medium term buying pressure for safe haven investments is trumping long-term fears. That is not a good indicator for the stock market. [ETFs to Hedge a Falling Dollar.]

At the same time, gold and gold mining stock prices have been rising. Since gold is commonly viewed as a safe haven from inflation, this situation is a bit puzzling. Vogt thinks the odd situation may be for one of three reasons:

  • The gold market is considering the short- to medium-term potential of a double dip recession.
  • The gold market is already reacting to the longer-term inflationary implications of the above mentioned monetary and fiscal policies.
  • The two markets — Treasury bonds and gold — are currently playing different time frames. And maybe this decoupling will continue.

Regardless, Vogt says the gold market is sending strong signals of a breakout. If you think the global economic recovery will sputter, you may want to heed Vogt’s advice. [Why Gold ETFs Have Investors’ Attention.]

If you sign up for our premium service, depending on your membership level, you’ll have the opportunity to delve deeper into gold ETFs. Among the features we offer are trend alerts, a dashboard you can customize, watch lists and the ETF Resume, a powerful ETF research tool. Learn more here!

For more stories about gold, visit our gold category.

  • SPDR Gold Shares (NYSEArca:GLD)
  • iShares COMEX Gold Trust (NYSEArca: IAU)
  • ETF Securities Physical Swiss Gold Shares (NYSEArca: SGOL)
  • Market Vectors Gold Miners (NYSEArca: GDX)
  • Market Vectors Junior Gold Miners (NYSEArca: GDXJ)

Sumin Kim contributed to this article.