Hello Trader,
There are a number of reasons why gold will rally sharply this year.
The most important reason is that real interest rates are sharply negative. Let me translate this into English.
Real interest rates are the normal interest rates you know but with the rate of inflation deducted. For example, if 10 year treasury yields are 2% and inflation is 5% then real interest rates are minus 3%. 2% minus 5% equals minus 3%.
This is the most powerful factor that affects the price of gold, bar none. Why?
The biggest buyers of gold are investors and central banks. At any given time, they have a choice. Should I buy treasury securities or gold. Treasuries PAY interest while gold costs money to store, insure and finance. So, normally, big investors like central banks prefer to buy treasuries and make some money.
But, when interest rates are negative, that rationalize disappears. They no longer have to worry about earning money from treasuries because negative interest rates means they are being paid to borrow money and buy gold. If inflation is 5% then the principle they have to pay back declines in value by 5% a year and inflation makes the, say, 3% interest they have to pay, actually minus 2%! So they can buy gold with free money.
Negative real interest rates equals major bull market.
We now have that situation of the negative real rates.
This is just factor #1 in my theses that gold is about to take off and skyrocket.
Watch this in-depth free video for more reasons why gold is about to take off.
This is going to be one of the big bull markets of the year. You need to participate.
Click here to watch the free video now!
Thanks!
Good gold trading,
Courtney Smith
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