Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold under NIRP? | Negative Interest Rates vs Bullion

Commodities / Gold & Silver 2019 Sep 12, 2019 - 04:56 PM GMT

By: Submissions


President Trump today called for the Federal Reserve to drop interest rates to zero and beyond into negative interest rate policy levels. 

Some onlookers might be shocked to see this strong suggestion by the USA's commander and chief.

TRUMP calls for NIRP

But what is way more shocking to learn, is that we have been living under negative real interest rate policies since the late 1990s in the United States (although not nominally of course, yet).

In the most crucial gauge, for how your purchasing power is doing. We must be conscious of real interest rates by using more accurate 1980 fiat US dollar inflation metrics.

Why else mainly is the fiat US dollar price of gold now up nominally about 6Xs since we went real NIRP late 1990s?

Today's admission from the POTUS, of our intended, further leaning to NIRP (likely before an inevitable financial structural reset gets undertaken) is just further fuel added to bullion's mania phase in value ahead.

The historic gold value and the future price of gold get negatively correlated with positive real interest rates.

Conversely, we historically see a rising value for gold vs. interest rates that are well below the real rate of inflation. That is the world we US citizens, and most western nation inhabitants have been living in now for about 20 years.

Given that some now $250 trillion in global record debt levels currently, without a significant financial structural system reset, we are unlikely to again see positive real interest rates for decades to come.

There is now over $17 trillion in negative-yielding interest rate bonds across the globe (most located in the EU and Japan).

There is now a genuine possibility we will not only see negative interest rate policies here in the USA in the coming decade.

How does Gold do under NIRP?

Exceptionally well, and it has already proven to have done so for over the last two decades.

First and foremost, currency today is so divorced from value and in such massive supply that we are reinventing interest rate policies. Negative interest rates have not happened in over 5,000 years, and that is about the same amount of time human beings have been going to gold to maintain their savings and wealth.

NIRP is bullish for both the future and current price of gold (and other bullion products for that matter such as silver, palladium, platinum). Negative real interest rates are the best environment for gold bull markets.

The ugly truth of the matter is that although we have not had nominal negative interest rate policies here in the USA yet. We have had real NIRP for decades now, as we consistently lie to ourselves about the actual inflation rate. If we used the 1980 method, a much more accurate methodology of measuring fiat US dollar inflation, we would realize that we have needed almost to make +10% on our investments annually to beat price inflation over the last two decades.

Real NIRP has been in the USA since the Mid-1990s

Now being implemented beyond not only a real but also on a nominal basis, NIRP is detrimental to society at large.

Negative interest rate policies increase all the negative wealth disparity effects of fiat currency creation coupled with zero interest rate policies (ZIRP). It further punishes prudent savers and leads to fewer capital investments and further capital consumption (e.g., share buybacks, etc.).

Full implementation of NIRP would only work in a cashless society. It would also make politicians and central bankers think about further laws contributing to the abandoning of physical cash notes.

All this increases the safe-haven demand for the best bullion products to buy. Gold, silver, platinum, and palladium have and should continue to be very sound, private alternative places to park money. Especially in an economy with lessoning cash privacy, further tracking of capital flows, and the centralized control consolidation dream of state-created and managed digital cryptocurrencies.

More NIRP policies in the world are very bullish signals for gold. In real terms, this has been the case for gold prices since the turn of the century. This is because the cost of the precious yellow metal is negatively correlated with real interest rates, the level of confidence in major central banks, and many of the seemingly unplayable global debt levels we have yet to write down and honestly default on.

Gold vs. NIRP: Bottom Line

Until a structural reset gets finally undertaken, twisted financial policies such as NIRP not only show us how perverse the financial system has become.

But NIRP is also helping to begin bullion’s mania phase to come as confidence in fiat currency gets further lost and debased predictably as it always does in its endgame historically.

To get a full perspective of how perverse and compounding-ly confusing nearly four decades of real inflation rate lies has twisted silver nominal price highs looking backward. Have a look at all-time silver price highs.

As we reach further into realms of unknown financial policies, it is common mathematical sense to have a prudent bullion investment allocation now.

To learn best practices on how to buy bullion and sell bullion, be sure to pick up our free SD Bullion Guide.

Thanks for visiting us here at SD Bullion.

By SD Bullion

SD Bullion - is a major 'Top 5' online physical silver and gold bullion dealer in the USA. Having now served over 100k customers worldwide with, "The Lowest Price. Period."

© 2019 Copyright By SD Bullion - 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.

© 2005-2019 - 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