After the surprise move by the BoJ to enter the world of NIRP, JP Morgan released a note stating that $5.5 Trillion of the JPM Global Government Bond index was now trading at negative yields. On a relative basis, precious metals are now a higher yielding investment than 24% of the sovereign bond market. Gold shares some similarities with sovereign debt markets, being size, turnover, and efficiency of trade. Turnover in the gold market is well in excess of USD $100bn a day, whilst loco London trades often have a spread in the5-10bp range. And with readily marketable gold valued at over USD $5 Trillion, it is larger than the majority of the sovereign bond markets, with the exception of the US Treasury and JGB market. Of course, unlike bond markets, irrespective of size, there is no deterioration in the credit quality of physical bullion, and there is also no risk of a substantial increase in its total supply, as any student of gold’s unique (compared to other commodities) stock to flow ratio will well understand. (VIEW LINK)