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Perpetual Negative Real Rates Ultimately Bode Well For Goldby Peter A. Grant
Mar 06, AM 
Gold is maintaining a consolidative tone as the stock market rally continues to play out. While stocks seem to be stealing the show lately, driven largely by the expected continuation of super accommodative Fed policy, the yellow metal continues to hold above key support.The Bank of Canada held rates steady at 1.0% today, as was widely expected, but they further watered down their longer term tightening bias. The BoC now says "the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required." Particularly in light of today's plunge in Canada's Ivy PMI, the prospect of tighter central bank policy is looking increasingly less likely any time soon. The ECB and BoE are expected to hold steady on rates tomorrow. The ECB is likely to reveal negative revisions to their growth outlook. That would likely get investors speculating once again about an ECB rate cut down the road. The BoE is unlikely to make any major changes to policy until Carney takes the reigns of the central bank in June, but Bill Gross of PIMCO tweeted the following this morning: Gross: Rule Britannia? Nah. Maybe the waves once upon a time but their economy is now a lifeboat. Sell the pound – Aggressive QE ahead. If the BoE does indeed return to aggressive QE under Carney, it would be the latest salvo in the burgeoning currency war. Easy monetary policy by the world's major central banks has been an important driving force in the stock market over the past four years, but it has been a major driving force in the gold market as well, and there are no real signs that such policies are likely to end soon. As I said, stocks are stealing the show right now, but gold is likely to shine once again. The yellow metal is in fact the ideal hedge against everything seemingly-perpetual negative real interest rates and currency debasement will ultimately lead to. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here. |
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Wednesday March 6
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