Grant’s Interest Rate Observer
MAY 15, 2020
Even so, it’s not gold but bonds that investors crave. They are grateful to purchase, for instance, the brand new tripleB-plus-rated PayPal 3¼s of 2050. How will the online money-transfer pioneer fare in the next 30 years? Could it be disrupted? What will become of the dollar, and interest rates, along the way? Is today’s buyer being compensated for these risks? Good questions, but, to yield famished fiduciaries, not the most relevant ones. They need basis points, not monetary theory, and they draw confidence, rightly or wrongly, from the long-running decline of interest rates. Gold may boast a multi-millennial record of honorable monetary service, but bond prices have been rallying for 39 years.
For all that gold is the epitome of money, and for all that Wall Street worships money, gold is unrespectable. Mention it in most any institutional setting, and people wince, though perhaps we overanalyze. Asset managers want the prices of their assets to rise, and QE answers that need. The kind of money the beneficiaries of radical monetary policy want is the kind you mine on a keypad.
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