Gold has broken from real yields: what the Fed is missing

For the best part of two decades, you could predict gold’s direction with a simple rule of thumb: when real yields (the return on government bonds after inflation) went up, gold went down, and the other way around. That relationship has now quietly fallen apart, and gold has kept climbing in conditions that should have held it back.

In this episode of Live from the Vault, gold analyst and whistleblower Andrew Maguire is joined by Danielle DiMartino Booth, CEO of QI Research and a former advisor to the Federal Reserve Bank of Dallas, to explain what the market might be seeing that the textbook model misses.

Booth’s argument centres on how the economy is measured. The numbers the Federal Reserve leans on are averages, and averages flatter an economy where most of the wealth and savings sit with a small share of households. Look under the aggregates, Booth argues, and the picture looks closer to stagflation than stability.

Through 2025 and 2026, gold has decisively broken its relationship with real yields. Historically, higher real yields raised the opportunity cost of holding gold and pushed the price down. That relationship has since come apart, with gold climbing even as yields stayed high.

Booth questions the conventional yardstick. Booth is “not sure how real the real yields are”, given what she calls structural problems in how inflation is measured. As Booth puts it, “if inflation is understated, the real yield is overstated.”

Booth expects gold to keep breaking other market correlations too, as markets begin to price credit risk properly after years of not doing so. Her example: a blue-chip name like SoftBank issuing debt at a 9.875% coupon, a junk-bond-style yield the market has not seen in years.

For the standing mechanics of how rates and gold interact, see our explainers on how Treasury yields move the gold price and interest rates and the gold price. This episode is about why that link may be weakening now.

The headline comes from Booth’s central argument: the Fed is looking at the wrong numbers. Booth points to the language of new Fed Chair Kevin Warsh, who she says leans repeatedly on aggregates, aggregate spending, aggregate consumption, aggregate GDP, and reads the labour market mainly through the headline unemployment rate.

The problem, in her view, is that averages reflect the people at the top. Booth cites the roughly $8 trillion sitting in US money market funds, most of it held by a small share of Americans, set against a national saving rate she puts near 3%, which suggests many households are drawing down their savings rather than building them.

Credit-card delinquencies, the share of borrowers who have fallen behind on their payments, are higher, Booth notes, than they were coming out of the 2008 recession, even with unemployment near 4.1%. Booth points out that a headline unemployment rate stays low partly because the labour force itself has shrunk, so the average hides the strain rather than showing it.

Maguire frames the risk as stagflation, weak growth with stubbornly high prices. Booth prefers the word “stagnation”, because she sees the driver as a lack of purchasing power in most US households. When producers and service providers cannot pass higher costs on to households that have little left to spend, Booth argues, they cut costs instead, which means job cuts and, in turn, less demand. That is the “adverse feedback loop” Booth opens the episode warning about: cost-cutting that feeds lower demand, weaker purchasing power and more cost-cutting.

Higher energy costs, sharpened by the conflict involving Iran, sit on top of that. The squeeze, both speakers stress, falls hardest on small businesses and farmers rather than on the large firms the aggregates are built around.

Asked where the stress surfaces first, Booth points to commercial real estate. Small and regional banks still carry the commercial-property loans most exposed to it, and Booth sees further risk in private markets: private equity, commercial real estate, and collateralised loan obligations (pooled corporate loans sold on to investors).

Booth’s concern is less the handful of big banks than the regional lenders that, as she puts it, are “the fabric of communities”, the local bank a farmer negotiates with face to face. A banking system narrowed to five or six large players is, in her words, “not a future that I’d like to see.”

According to Booth, the real risk in the $8 trillion money market trade is not losing access to your cash but losing the roughly 5% yield on it, which could vanish almost overnight if the Fed cut rates to zero in a panic.

With governments across the major economies straining under record debt, led by a US burden Maguire puts near $40 trillion, and central banks steadily buying physical metal, demand for gold has held firm despite the high real yields that would normally drag its price down.

Both experts arrive at the same conclusion: physical gold and silver earn their place as long-term protection for your wealth, not as a bet on whatever story the market is telling this month.

Booth is particularly sceptical once sell-side banks start telling investors how much gold to hold, warning that “the last entity you want advocating for an asset class is a sell-side bank.”

For savers who take that view, allocated metal can keep gold’s core advantage intact. Each unit of gold (KAU) represents one gram of fully allocated 999.9 fine gold, held in your name in independently audited vaults and redeemable for physical metal. Beyond storing it, you can spend, send or sell it, while earning a debt-free yield for holding your gold in your Kinesis account.

For years, gold fell when real yields (bond returns after inflation) rose, and rose when they fell. In 2025 and 2026, gold has risen despite high yields. Booth argues part of the answer is that inflation is understated, so the “real” yield is overstated, and that central-bank and sovereign buying of physical metal has become a stronger driver than the rate link.

 Booth explores how the Fed reads the economy through aggregates and the headline unemployment rate, which reflect the wealthiest households and mask stress lower down, such as a low saving rate, rising credit-card delinquencies and a shrinking labour force.

Booth notes that a fund “breaking the buck”, falling below its $1 share value, is treated as a systemic red line, and that being locked out of a fund in a panic is restricted by rule. The risk Booth highlights is different: the yield can fall quickly to zero if the central bank cuts sharply, as it did in 2020. Nothing here is investment advice.

The metal itself does not. Holding allocated gold with Kinesis (KAU) can earn a debt-free yield, paid from a share of network transaction fees. The yield is discretionary, variable and not guaranteed.

• Live from the Vault, Ep 292, “The Fed Is Looking at the Wrong Numbers Ft. Danielle DiMartino Booth”, Kinesis Money. https://www.youtube.com/watch?v=snZhvcvKdOQ
• Kevin Warsh sworn in as Chair of the Federal Reserve, 22 May 2026. Federal Reserve Board. https://www.federalreserve.gov/newsevents/pressreleases/other20260522a.htm
• Current gold price, about $4,154 an ounce on 28 September 2026 (down from about $4,298 the prior session). CNBC Select. https://www.cnbc.com/select/the-price-of-gold-today-sept-28-2026/