When bond yields start to rise, what happens to the price of gold and shares‪?‬ Finance & Fury Podcast

Welcome to Finance and Fury. In the last episode I went through the bond market and how inflation expectations being on the rise are having their effects, yield curves starting to steepen. So what will happen to other asset classes?
In this episode we will look at this question. If the trend of nominal yields continues, what will be the effects on different asset classes, cash, shares and gold?
Before we get into that – quick recap that when talking about yields, it is the returns on bonds expressed as a percentage bond yields are inversely related to the bond prices. The lower the price, the higher the yield, and vice versa Bond yields have been declining since 1982 in a long-term trend – as they were nearing zero, could continue into the negative long term or reverse course – 10-year Treasury yields have fallen from 15.8% 40 years ago There are fears that due to the economic recovery plans for every nation being printing money for stimulus measures – that this could lead to an inflation outbreak – hence, this recently led to a rise in bond yields Happened in most countries – in the US the yield on 10-year bonds were 0.91% at the start of the year – in a matter of a two months they went to 1.49% then 1.61% before declining to 1.42% The Australian 10-year rate jumped to 1.93% and this spooked the share markets Also, important to understand the nature of money flows – and that is that different asset classes compete for your money, as well as institutional money That is where the yields on bonds (i.e. the returns) can affect other investments prices by competing for investors money – supply and demand – if more money flows into one asset class in the expectation of additional returns over another – that is additional demand – so if the supply stays the same, prices should naturally go up Bonds can be seen as a safe harbour – but if bond have a negative yield, people may hold cash for 0% interest rates or Gold instead – so currencies can move or the price of gold also move if people are selling bonds and reinvesting in another safe harbour When making an investment decision – there is always an opportunity cost – i.e. what you forego in not choosing the next best alternative - the opportunity cost of an asset is what you give up by owning it – so the OC for investing in shares could be the yield on a bond – which may be dependent on the risk or return profiles of an investor However – there has been an increase in the amount of money supply – increasing the amount of money that can flow – the increase in the money supply has been flowing into bonds initially through QE – this can then be used for the reinvestment into other assets – where the money flows could be based around incentives of returns This is part of the theory as to why QE can lift share prices as well – super funds or other institutional investors selling their bonds in the secondary market to CBs and then using their new found cash to repurchase other asset classes policymakers have distorted traditional free markets – the efficient allocation of scarce resources  
To start looking at asset classes - Quickly go through the dollar, or cash in general
No surprise to anyone that the real value of cash is generally declining – the additional supply of money naturally devalues cash in each domestic country depending on what is happening to the supply Between countries - There are a million things that can affect currency exchange rates – interest rates, net exports, but the big thing for the value of money that is relevant to this episode is specifically inflation – Cash is used as a Medium of exchange – exchange for goods, services, but also as savings or an investment – holding cash has an opportunity cost – it is actually rather costly to hold cash in real terms if inflation does materialise – imagine getting an interest return of 0.5% if inflation is 3% - negative yield on the mo