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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (16887)	3/31/2016 8:25:40 PM
From: Goose94	Read Replies (1) \| Respond to of 202920

Negative Rates Could Double Gold's Long-Term Performance - World Gold Council Financial markets are seeing unprecedented negative interest rate polices being implemented around the globe, which, according to the World Gold Council, could be good for gold in the long term as investors are forced to pay governments for holding bonds. “History shows that, in periods of low rates, gold returns are typically more than double their long-term average,” the council said in its latest gold market update, which looks at the impact of a world in negative interest rates. The report noted that investors are starting to view gold as an attractive investment as there are little options for safe-haven assets, which have typically been government bonds. “Bonds generally help balance the risks inherent in portfolios. Low yields, however, not only promote risk taking, but also limit the ability of bonds to cushion pullbacks in stocks and other risk assets in investment portfolios,” the council said in the report. “Our research shows that gold can help investors balance portfolio risks in this largely unprecedented environment.” The WGC noted that more than $8 trillion worth of high-quality sovereign debt, about 30% of the market, is trading in negative territory. At the same time, 40% of global bonds are trading with yields below 1%. “When yields are adjusted for inflation, the figures are even starker: 51% of sovereign debt (US$15 trillion) is trading with negative real yields and only 16% yields more than 1% in real terms,” the report said. “Unless investors are willing to accept a loss-making investment strategy, they may need to consider increasing their holdings of gold. We believe this should resonate especially well with pension funds and foreign reserve managers whose investment guidelines are typically stricter and who hold a large portion of bonds in their portfolios,” the council said. While negative interest rate policies are bad for investors, the council noted they also erode confidence in fiat currencies, raising the threat of a global currency war, and are increasing market uncertainty and volatility as these are seen as last-ditch attempts by central banks to spur growth and promote inflation. “Negative interest rate policies were designed and implemented to fight against deflation and currency appreciation pressures, especially vis-à-vis the U.S. dollar. Nonetheless, currencies from all advanced countries/regions that implemented negative rates have actually appreciated against the U.S. dollar, year-to-date, ranging from about two to seven percent. The longer this situation persists, the greater the likelihood some central banks may pursue intervention measures,” the report said. By Neils Christensen