Authored by Alexander Zemek-Parkinson via BondVigiliantes.com,

Is there a relationship between the price of gold and bonds? Most vigilantes would agree that there is some correlation based on inflation, with bond yields and the price of gold rising when inflation is on the way up, and vice versa. Most "goldbugs" would probably agree with this assessment. They would say that the metal was a repository of long-term value and was an effective medium for protecting purchasing power. The late Julian Baring was the man with the golden fund1. He presented the relative purchasing power of gold in terms of fixed-price menus at the Savoy, an exercise he frequently undertook with M&G's former CEO Paddy Lineker. Baring's results were somewhat mixed, but there can be no doubt of his conclusion that, over time, the gold price not only equalled but outpaced the rate of inflation. It would be easy to conclude, in today's world of rising bond yields and a historically high gold price, that there is a correlation, and that it is still valid.

But is it? An answer to this can be found in Ian Fleming's novel, Goldfinger.