Russia is claiming that it has developed and approved a "world first" coronavirus vaccine.
Before we get too ahead of ourselves and thinking that we're nearing the end of the COVID-19 pandemic, there are a number of issues with this claim.
The first is whether or not it's even true. Russia has long been a hot bed of misinformation and the announcement could simply be the country attempting to position itself as a global leader in science and technology.
The second is whether or not the vaccine is either safe or effectiveness. Despite being approved by the Russian government, the vaccine supposedly has not even gone through a Phase 3 clinical trial, where it would be tested out on a large scale group of people. There also hasn't been any information or study material related to the vaccine.
In other words, we have a claim of a vaccine, but nothing really, at this point, to back it up.
Investors, however, in their never-ending quest for any kind of bullish news, are off and running on the news. Dow futures are up more than 300 points in a continuation of the rally that's been going on for nearly two weeks.
That's also been bad news for safe haven assets, including gold.
Precious metals had already been pulling back modestly off of their recent highs, but the Russia announcement has accelerated the trend.
Gold prices are already down more than $80/ounce over the past few trading days and there could be further downside ahead. If investors begin pivoting away from a more cautious sentiment into full-on risk-seeking mode, it could mean an extended pullback in defensive assets, including gold, Treasuries, utility stocks and the dollar.
Yields on the 10-year Treasury note are already up 5 basis points in early Tuesday trading and now sit about 0.11% above their recent low.
If a scenario plays out where investors remain bullish and the VIX continues falling (it's already down to 22 as I write this), it's easy to envision a scenario in which gold pulls back to $1900 in relatively short order.
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