[New post] Financially Transmitted Disease (FTD): The Ticking Bond Bomb
User ID posted: " https://www.youtube.com/watch?v=z_cSoo2ZFJM Ticking Bond Bomb... and Win an Annual Subscription of My Research by Katusa Research Win an annual subscription: https://join.katusaresearch.com/katus... Enter It's the new world we live in. Negative inter"
Win an annual subscription: https://join.katusaresearch.com/katus... Enter It's the new world we live in. Negative interest rates, high bond prices, strong US dollar, and a stronger gold price.
When I was on a panel at a large resource conference 5 years ago… I stated in the coming years we would have further negative interest rates and higher bond prices. The other panelists and "gurus" stated that was "metaphysically impossible".
Well, it's exactly what happened and we are now in an era of Quantum Economics.
Be careful of following a dated "framework" by a dated guru.
For example, did you know that if you bought a French or German 10-year bond, you'd lose money?
Yes – yields on those 10-year government bonds are negative.
Let's turn to their neighbor, Switzerland. It's a pretty safe country so you'd think it would be hard to lose money there right?
Wrong. Lock your money up for 30 years and earn -0.192%.
Yes, you're reading that right…
You give the Swiss Central Bank your cash for 30 years, and in 30 years they give you back less than you started with.
By keeping interest rates negative, the central banks are trying to create an environment that encourages consumer spending.
Or at least that's the hope. Given EU inflation can barely get above 2% which would be considered healthy in a normal market, things are not even close to back to normal across the pond.
Financially Transmitted Diseases (FTD's)
The United States has kept with its Zero Interest Rate Policy (ZIRP), even in the face of skyrocketing monthly inflationary numbers.
What was once perceived as an ultra-loose monetary stance is now a disciplined approach compared to Japan and the EU. And ZIRP and NIRP are critical to keeping the economy going. #bondbomb#nirp#giveaway
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The Ticking Bond Bomb. In 2019 I spent a lot of time talking about Quantum Economics what is Quantum Economics it's the new world we live in negative interest rates high bond prices strong us dollar and a stronger gold price five years ago when on a panel at a large resource investment conference I stated that in the coming years we would have further negative interest rates and higher bond prices the other panelists and guru stated that that was metaphysically impossible well it's exactly what happened and we are in an era of Quantum Economics be very careful of following a dated framework by a dated guru for example did you know that if you bought a French or German 10-year bond you'd lose money in 10 years yes yields on those 10-year government bonds are actually negative let's turn to their neighbors Switzerland it's a pretty safe country so you'd think it would be hard to lose money there right on their 10-year bonds wrong lock your money up for 30 years and earn negative interest yes you're reading that right you give the Swiss central bank your cash for 30 years and in 30 years they give you back less than you started with the chart you're looking at right now shows the current yields for bonds in France, Germany and Switzerland red for France green for Germany and red for Swiss everything short and medium term duration is below zero by keeping interest rates negative the central banks are trying to create an environment that encourages consumer spending or at least that's the hope given EU inflation can barely get above two percent which would be considered healthy in a normal market things are not even close to back to normal across the pond FTDs Financially Transmitted Diseases the united states has kept with its zero interest rate policy even in the face of skyrocketing monthly inflationary numbers what was once perceived as an ultra loose monetary stance is now a disciplined approach compared to japan and the EU and ZIRP and NIRP are critical to keeping the economy going big fiscal stimulus packages and ultra-low interest rates are the new normal both in the US and abroad the combination of ultra-low interest rates and inflation leads to negative real interest rates it is simply the yield on a non-inflation index bond minus the inflation rate as you might guess in today's world of zero or negative interest rates once you subtract inflation you are left with a negative or real rate of return incredibly currently there's over 16 trillion dollars in negative yielding debt these days globally the number is almost unfathomable but here's the crazy part it's only going to get bigger as inflationary pressures on certain sectors of the economy pick up more and more debt will go negative yield in this situation investors are incentivized to either one spend the cash immediately so it doesn't lose value and we've seen that in the past in Zimbabwe, Yugoslavia and many other areas or buy physical assets which are stores of value like real estate art and gold that's also happening in real time gold price versus real yields the chart right here that you're looking at paints a very clear picture of the relationship between real interest rates and the gold price this data goes back to 2006 where each dot represents the weekly gold price and associated real interest rate while this is only one metric the relationship is clear if negative real rates continue it is likely supportive for stronger gold prices it's not just gold that is doing well these days the commodities boom is at full throttle recently taking out the old five-year highs in the Bloomberg Commodities Index that's the chart you're looking at right now where it gets exciting is when you take a longer term view here's the same index back to the year 2000 as you can see we are still miles away from old highs in fact the index would need to rise by about 150 percent to get back to the old highs commodities investing requires a contrarian strategy it's one reason why many on wall street shun the sector jumping on the meme and the FOMO bandwagon is a lot easier these days commodities relative to stocks have never been cheaper here's a 60-year chart in the making the chart you're looking at right now shows the ratio of the Bloomberg Commodities Index versus the S&P500 on a total return basis it's a ratio that illustrates the incredible cyclicality of the commodity space when it's on you better be involved and when it's off it's best you keep the powder dry and pick up the best assets and management teams at a big discount so this chart is the S&P commodity index versus the S&P500 so you can look at the red circles at the highs so when the commodity index was expensive relative to the S&P500 and currently you look at the gold circle we're at lows over 60 years I've dedicated my entire 20-year career as a professional fund manager to the commodity space traveling the globe multiple times over and while building one of the best rolodexes in the sector the natural resource sector is as much of an investment in the people running the company as it is a bet on the deposit and the commodity I don't take finder fees kickbacks or stock options and no company can pay to be in my portfolio my subscribers and I just started loading up on several of my favorite gold stocks subscribe to the KRO which is the Katusa Resource Opportunities to find out exactly what prices I'm buying at and what price I sell at before the trade occurs and you get to excel before I do if you want to give your portfolio an edge consider becoming a member and giving it a try for yourself finally by popular demand the Katusa fellowship is back I'll be giving away at least two lucky YouTube viewers a one-year subscription to my premium newsletter click the link in the description below to enter for free stay safe
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