Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Move over ZIRP... Here Comes NIRP!

Interest-Rates / US Interest Rates Oct 12, 2015 - 06:24 PM GMT

By: MoneyMetals

Interest-Rates

Precious metals prices enter the new week looking to extend the rally that began Oct. 2nd. Silver has gained nearly 10%, and gold is up almost 3.5%. The notion that the Federal Reserve governors may have missed their window to raise interest rates is beginning to sink in with investors.

In fact, if the U.S. economy should fall into recession, investors may see central planners move from zero interest rate policy (ZIRP) to the launch of negative interest rates.


The minutes from the most recent Federal Open Market Committee meeting reveal Janet Yellen and company are looking to the socialists in Europe for ideas, and central bankers there have already experimented with negative interest rate policy (NIRP).

Bottom line: You should soon expect to start paying interest for the “privilege” of lending your savings to a bank!

This week, investors will be watching reports on inflation, retail sales, and industrial production. The prospect of recession continues to loom larger, despite a small rally in stock prices. For now, investors seem more focused on the delay in hiking interest rates than deteriorating fundamentals

Precious Metals: More Important Than Ever in Your Portfolio

Nobody is talking about it these days, but we still live in an inflationary age. Wall Street is fixated on the possibility of deflation as prices for crude oil fall and headline Consumer Price Index flat-lines. But the wheels of global inflation continue to turn.

Zero interest rates and bond purchasing programs have defined central bank policy for most of the last decade. Central bankers developed these extraordinary programs and sold them to the public as economic stimulus.

It is now clear just how little of that largesse made its way into the real economy. We now know the real purpose of those programs was to stimulate bank profits and boost equity markets.

Meanwhile, government debt and entitlement commitments have only grown larger. That epic problem was top of mind for investors when gold and silver spot prices peaked in 2011. Battles over the debt ceiling and inflation fears captured headlines.

Unfortunately for precious metals bulls, the central planners at the Fed and Wall Street managed to shift investor focus away from those topics.

Higher stock prices, heavily massaged economic data on employment and consumer prices, and hammering down of paper gold and silver prices all help to mask the fundamental problems that make metals so essential in modern portfolios.

These days, most investors seem unconcerned about the inflationary potential of the trillions of dollars created by the Federal Reserve to buy U.S. Treasury bonds and mortgage securities. Many are outright “inflation deniers,” and few seem the least bit worried about what ZIRP or NIRP will ultimately do to the purchasing power of the dollar.

But rewarding borrowers and spenders while waging jihad against savers IS going to lead to serious ramifications. And all those extra dollars created in multiple rounds of QE are out there – in the stock markets, parked as excess bank reserves, and just about everywhere else but in the real economy.

Inflation and financial sector risks have not been vanquished. They are still there, and, in fact, they are still growing. They aren’t weighing heavily in investor psychology today, but change is already in the air.

Fear will factor prominently in investor decision making once again – perhaps soon.

The Federal Reserve is in no position to significantly raise interest rates. Congressional Republicans will soon reveal just how incapable they are of drawing a line in the sand on raising the federal debt ceiling even higher than the current $18.1 trillion cap.

And people are once again talking about the possibility of recession. Investors are starting to worry about exorbitant price to earnings (P/E) valuations, falling corporate profits, and a potential bond bubble. Some corporate and municipal bonds are priced as if the borrower was Apple when the financial statements look more like they belong to Enron.

Despite all of the disparaging talk about precious metals, there is always demand for an inflation hedge that offers privacy, diversification, and zero risk of going bankrupt. Look for investor demand to rise dramatically in the coming years in spite of the bias against gold from Wall Street.

Gold and silver may be down, but after thousands of years of history as a reliable store of value, but they are anything but out.

By Clint Siegner

MoneyMetals.com

Clint Siegner is a Director at Money Metals Exchange, perhaps the nation's fastest-growing dealer of low-premium precious metals coins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon, puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

© 2015 Clint Siegner - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in