Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Stock Review : Markets : News Wire : Quotes : Radio : Silver : Stocks - Main 
  
 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Closing Report: Gold and Silver Fall Roughly 1%
By: Chris Mullen, Gold-Seeker.com

Time to Re-Assess
By: Avi Gilburt

GDX...The First Consolidation Zone
By: Rambus

Awareness of Fed Credibility Problems Going Mainstream
By: Clint Siegner

Unknown Voluntary Servitude
By: Richard (Rick) Mills, Ahead of the herd

Gold: Jobs Report And Fed Are Key
By: Stewart Thomson

11 Reasons Why Everyone Wants to Move to Texas
By: Frank Holmes

Bron Suchecki: Dutch central bank hides gold bar list to conceal leasing
By: Chris Powell, Secretary/Treasurer, GATA

No one can ask why gold isn't keeping up with central bank balance sheets
By: Chris Powell, Secretary/Treasurer, GATA

Why the Convoluted Message From Yellen?
By: Gary Tanashian

 
Search

GoldSeek Web

 
Is gold really the asset class most at risk from higher interest rates?


 -- Published: Sunday, 24 August 2014 | Print  | Disqus 

By Peter Cooper

A five-year regime of artificially low US interest rates is responsible for a bubble in stocks, bonds, real estate, emerging markets and many other asset classes. But can it really be said to have boosted gold prices?

Certainly not over the past three years. Gold peaked in October 2011 and silver in April of that year. Precious metal prices today are not so far away from where they stood five years ago.

Gold inflation low

Why then should a rise in interest rates be a big risk to precious metal prices if they have been amongst the assets least impacted by ultra low interest rates? Surely the risk is with those assets, not gold and silver.

But as Reuters reports traders last Friday noted that ‘gold prices continued to hover just above a two-month low reached on Thursday. Bullion has dropped about three per cent in the past five sessions, underperforming US Treasury bonds, which are considered the preferred safe-haven investment.’

If there is really a high risk of interest rates going up then investing in bonds will be suicidal. Lest we forget bond prices move in the opposite direction to interest rates as an automatic function of that instrument.

What happens to real estate prices when interest rates go up? That’s a no-brainer. They go down because you have to pay more to ‘own’ a house with a mortgage lien over your head.

As for equities higher interest rates might be seen as a broad indicator of a recovering economy but they are a direct cost on business and on the consumer’s pocket too. Stock markets almost always fall as interest rates pick up, and often do so dramatically when they are in a bubble.

So where is your least worst option? Precious metals perhaps? And when all the other major asset classes head south into which narrowly held market will the smart money go?

Life insurance

Gold is often seen as an insurance policy against financial Armageddon. Yet that is where we are most likely going as asset bubbles meet their inevitable demise and the over-borrowed go spectacularly bust.

Sat in London today I have witnessed house prices falling six per cent this month, according to the huge property website Rightmove and reports of a surge in 30-year mortgages as the last to get on this ladder struggled to pay massive house prices before this price slump. A sad start in life for some young people.

Are you really going to tell me that holding gold is a more risky prospect? What would you rather own when starring into the great abyss? What are investors going to dump? And what will they buy next?

Gold and silver is what you should be buying as these bubbles burst. This asset class alone will hold and improve its value as everything else comes crashing down. Then you can use it to buy houses, stocks and bonds at reasonable prices.

http://www.arabianmoney.net/

 


| Digg This Article
 -- Published: Sunday, 24 August 2014 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2016



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.