Today is the day of UK’s EU referendum and that worries investors. This and other factors make them cautious and lead to a record high cash level at fund managements since 2001. Interestingly, at the same time analysts seem to be positive about the near future, but patience might be an important virtue in the next days.
Negative interest rates can harm the economy and aren’t good for the investors – we have pointed this out several times during the last months. Now bond guru Bill Gross warned about the dangers of the negative yields on government bonds. He believes that this can be “a supernova that will explode one day”. He wrote this just some days before the yield on the 10-year German bund fell negative for the first time ever. We believe there might be ways to keep ourselves out of problems.
In the last 4-5 years the price bubble, that has started to grow on the gold market after 2008, ended. Luckily, not with a burst but with a slow and long correction. As a sign, the news about gold are started to lessen, followed by the correction, but at the beginning of 2016 an important turnaround came: gold started to rise from its $1050 low. The rise was significant, topping at 25%, with a $1300 high. Behind all this might be two reasons.
Some interesting news started to surface on the internet lately: the FED says that there’s $1.4 trillion in circulation, but they only know the whereabouts of 15% of it. So most of the US currency is missing, but that’s not a problem for them: keeping savings in cash is basically free money for the government.
Negative interest rates are becoming a common thing among federal banks, and this may change the world of economy and investment. The reason is simple: if interest rates are close to zero (or below that) people with long-term bank savings will realize that their accounts are not growing with time, they may even shrink.