Incompetence and Monetary Dysfuntion Make Gold Look Attractive

Incompetence and Monetary Dysfuntion Make Gold Look Attractive. The [Swiss Franc] episode also underlines the increased intensity of deflationary pressure in Europe. A minus 0.75 per cent deposit rate makes cash look attractive. It also makes a case for gold. While the yellow metal is often thought of as a hedge against inflation, it is more of a hedge against central bank incompetence and monetary dysfunction, which includes deflation. There is no opportunity cost in holding gold when interest rates are below zero. And sure enough, the price of the precious metal has recently been creeping up. With further deflationary pressure and more competitive devaluation, negative interest rates will spread across a growing number of countries where inflationary prospects are minimal. The growing band of investors who confront these dismal negative rates have good reason to ensure that gold makes a comeback. Full article (paywall): (VIEW LINK)


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