The world is awash in negative interest rate government bonds. Basically, you loan the governments money by buying its bonds, and at maturity you cash is your bonds for less than you paid.
How crazy is that? You pay the government for the privilege of letting them waste your money for a few years.
The folly at the heart of our times is clear. Money is not supposed to work like this. Thousands of years of economic progress make the record clear: borrowers are supposed to offer to pay to borrow our money. And the more of a credit risk they are, the more they have to pay us to offset the risk.
Negative interest rates are a sign of a topsy-turvy world. None of it makes sense. And we can assure you that we, like most rational people, will never pay some spendthrift good money to borrow money from us.
There are about $15 trillion of negative interest rate government bonds out there. You can’t see it yet, but it represents a world-class economic calamity hurling down the tracks.
That is why gold and silver are moving higher. The smart money wants to get out of the way of the coming monetary train wreck.
Jim Grant, the editor of Grant’s Interest Rate Observer agrees. He told CNBC’s Rick Santelli the other day that these radical policies beget other radical policies. So this monetary drama ends with a much higher gold price, says Grant.
Meanwhile, the President is at war with the Fed, and the Fed is at war with the President. Bill Dudley, the former president of the New York Fed has explicitly called for the Fed to pursue policies that put Trump’s reelection at risk.
In the meantime, is the trade war on or off? Some days it appears to be both on and off. Some days the US and China are both talking and not talking. All we can say is that we’re glad we’re not soybean farmers wondering before the next planting season if we are losing an important market to Brazil.
We advise our clients to get out of the way of this uncertainty and madness, by moving to the safe-haven gold and silver.
You don’t need a Ph.D. in economics to recognize the causes of the gold and silver bull market! Take steps to protect yourself and your family. But do it now. Don’t be left behind!