In our negative real interest rate environment, the market has begun to put a premium on the certainty of income.
In this negative real interest rate environment, it is best to focus on assets that will stand to benefit, such as dividend paying large cap equities.
In the current negative real interest rate environment, these large cap stocks will be big beneficiaries as investors seek out secure, growing dividend yields, something that fixed income markets will not be able to provide.
The problem for investors comes when real interest rates are negative, when the nominal interest rate won't keep up with inflation.
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Deutsche Bank says the main risk to gold prices would be a turn in the U.S. interest-rate cycle and end to negative real interest rates.
Negative real interest rates occur when the inflationary rate, or CPI, is greater than the current interest rate.
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Others state an inevitable rise in interest rates, as many central banks around the world have interest rates artificially low, let alone the real interest rate close to negative.
Our fifth indicator is the real rate of interest, which is negative in over half of the economies.
In his latest shareholder letter, Tocqueville Gold Fund chieftain John Hathaway bases that forecast on continued negative real interest rates: That is, as long as central banks push interest rates below the rate of inflation, gold performs well.
The credit boom was created by initially low adjustable rate mortgages, interest-only or negative amortization loans, and an appreciating real estate market that allowed homeowners to extract equity to help make mortgage payments.
This is not true currently in the United States, where we have negative real interest rates, basically guaranteeing that the income generated from US government bonds will not outpace the rate of inflation.
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