How to play 21 gold12/5/2023 With NIRP, an investment with zero yield is preferable to a bank deposit with a negative yield. Why invest in a metal that produces no yield? Because under special circumstances a yield of zero is an actual yield. Gold is a chunk of metal that sits in a shoebox under my bed (which is why I hide my address from the public). Bonds and dividend stocks produce pre-stated yields by defined dates. Yen deflates, making an ichiman en bill held now worth more in the future. But many investors eschew gold because it is a non-yielding investment but yield is relative, as you will soon see. The rate hike in December spurred a sudden and sustained influx of capital into such safe havens, explaining the rise in gold prices. Gold and Yen, two currencies, one modern, one old, rise when investors seek safe havens. Of course, this is where macroeconomics, a subject created from the aftermath of the Great Depression, makes assumptive mistakes. With interest rates higher, moving capital from gold into yield-producing loans makes sense. In this case, the problem investors saw on December 16 was a rate hike.įrom a macroeconomics standpoint, the price of gold should not have risen after a rate hike. I use the word "surprising" lightly, as the price of gold tends to rise when investors see a problem in the market. Starting from the 16th of December, the price of gold began a surprising rebound.
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