We believe the main reason we're seeing a global rush to owning physical gold is due to the fear of Negative Interest Rates. As if Zero Interest Rate Policies aren't bad enough, several European countries, Switzerland, and Japan have implemented negative interest rate policies (NIRP). Today, with these policies in place, investors are actually paying the government and banks to hold their money, a proposition that, in our opinion, is absolutely insane.
Think about it-you're guaranteed to lose money if you invest in government bonds. This frightening concept has both private and institutional investors in these countries scrambling for alternatives and there are several other countries currently contemplating negative interest rates as well.
Negative interest rates erode confidence in fiat currencies, which history has proven many times is the primary driver of higher gold prices. Today, if you're an institutional investor losing money in bonds or a saver of cash getting a negative yield, then gold offers a reliable store of value and a perfect, private hedge. In their most recent quarterly report, the Bank of International Settlements, the hub for Central Banks, mentioned that investors' "confidence in central banks has been faltering" as it becomes more and more clear that they are running out of additional policy-making options.
Your real fear should be what would happen to the value of the dollar if we resort to negative interest rates here in the United States. We fully believe this will be the straw that breaks the camel's back and will drive the price of gold to new all-time highs. Already, fear of these policies has led to a surge in gold coin and bullion sales around the world. American Eagle buyers bought 83,500 ounces in February, a 351 percent increase from the 18,500 ounces sold in February 2015. Other world mints are reporting similar sales increases as well.
The fact remains that investors here and abroad have very short memories these days. Out of nowhere last summer, stock markets around the world wavered due to plummeting oil prices. Early this year markets were tumultuous due to a selloff in Chinese equities. Right now all seems calm but if the recent past is any indication, market sentiment can change very quickly and the importance of owning physical gold has never been more apparent. While nobody can time markets perfectly, we believe it's important to be aware of financial mega trends and take action before out-of-control Central Bank policies can affect your investment portfolio.
So far this year:
Dow Stocks are up 1.2 percent.
The S&P 500 is up .73 percent.
The NASDAQ is down 2.13 percent.
