Inflation, interest rates, and why you should own gold
By GCRU Gold News on Friday, August 22 2014, 08:49 - Permalink
The answer: Gold.
The question: What is the best investment to own today as the Federal Reserve begins raising interest rates?
How we get to the answer — an answer that would seem to fly in the face of conventional wisdom — is why I come to you today. And this answer will reveal to you why you should own gold.
The knock on gold is that it pays no rate of return and is, therefore, not a smart asset to own when money in the bank or in Treasury paper offers a decent yield.
But while rates will begin to rise, money in the bank or in Treasury paper will still offer noreal yield in the future, given that inflation has begun to move up as wages now rise (a little jab to the gut from all those efforts to push minimum wages higher). That means inflation will equal or outpace the interest rates you’ll be able to earn in savings accounts, CDs and government bonds.
And that is the environment that is brightest for gold.