≈ And Gold for free. ≈
Two things are constantly fighting for my attention every single day: the truths about Life & Universe and bills to pay.
Recently, though, there is one other topic that wants to make it to the list: negative yields.
We all know that the major central banks have been flooding the markets with easy money for over a decade, expanding their balance sheets from a mere $5 trillion to something around $22 trillion. However, sovereign bonds with negative yields are stealing the thunder.
Last time I’ve heard, something like 20% of the total sovereign bonds issued around the world (≈$ 12.5 trillion) is in negative yield territory. Such a phenomenon is becoming mainstream in the corporate world too. On Q1 2019, LVMH Moët Hennessy – Louis Vuitton issued bonds yielding –0.17%.
Take a quick look at this data here, fresh from Bloomberg’s website (Bond | Yield):
- Germany Bund 2 Year Yield | –0.86%
- Germany Bund 5 Year Yield | –0.85%
- Germany Bund 10 Year Yield | –0.59%
- Germany Bund 30 Year Yield | –0.01%
Three years ago, James Rickards released the book “The New Case For Gold”. Right in the first pages, he lays out the case against Gold in six bullet points. Number five reads “Gold has no yield”. That is a true statement. Gold is money and money has no yield.
Sometimes truth is stranger than fiction, I guess. Now that bond yields are starting to dabble into the realms of negative numerals, Gold is almost becoming a natural carry trade against them. Its zero yield looks profitable from this perspective.
With all that said, I can only leave you with this quick “Thought Of The Day”:
- Buy a vault.
- Buy Gold.
Chart of the Day
Money for Nothing
Let’s talk about printing money for a second.
Video of the day
Dire Straits – Money For Nothing
Lemme tell ya, them guys ain’t dumb.
Today’s line up
Broker Madness! Part 5
We are continuing on with the platform for Interactive Brokers. Last week we went through putting on a spread with a condition and reviewed the different order types that can be used to enter a trade. In addition to the spread orders, we went through the risk navigator to learn how to hedge our portfolio using a beta weighting tool.
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