Clunk Clunk Bang

What was that sound?

The sound of the bond market hitting the red-line?

Consider the following chart of gold compared to the performance of the US long bond:

The green line represents the 12 to 1 level for the gold to bond ratio. Yesterday we blasted through it. What is the significance of this ratio?
Bonds are the traditional risk adverse investment.
An increase in the gold to bond ratio means that gold is outperforming bonds. In other words, bonds are considered to be riskier than bullion that pays no interest.

As long time readers will recall, I have previously stated that the danger level in this ratio is 10 to 1. We are now at 12 to 1 and the momentum is accelerating to the upside. If anyone thinks that sovereign debt levels are not a problem they need to look at this chart. A bond bubble has formed and will collapse as investors move out of bonds looking for safer havens.
The last safe haven is gold.