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MarketWatch/William Watts/7-11-2020
“Chalk it up, in part, to opportunity costs. Efforts by global central banks to push down interest rates, which have fallen into negative territory in real, or inflation-adjusted terms, in the U.S. and are outright negative in many parts of the world, mean that investors who hold gold aren’t missing out on the yield they would earn from holding bonds in more usual circumstances.”
USAGOLD note: The Fed has said it will keep rates near zero to “at least 2022” [CNBC – 6/10/20]. If that be the case, the situation described will be a primary influence for years to come. Visual Capitalist finds that 25% of bonds globally bear a negative rate of return – a partial explanation for gold’s outstanding performance over the past few years in most of the world’s currencies.
Chart courtesy of Visual Capitalist • • • Click to enlarge