Interest rates remain BELOW the cost of inflation.
The current level of U.S. interest rates remains a hugely bullish factor for gold prices.
Real (inflation-adjusted) rates in the United States remain negative. Ever since the credit crunch three years ago, the Federal Reserve has been committed to fighting falling prices. That’s why the central bank has kept interest rates so low.
This means investors are not being compensated for holding cash or short-term fixed-income securities because rates are below the cost of inflation. Since the dollar pays almost nothing to its holder, it’s actually a liability to carry.
That alone is enough of a reason to continue to own gold and gold stocks.
The yellow metal yields nothing. But it has intrinsic value. The dollar has no intrinsic value and has lost its purchasing power every decade since Nixon broke the gold window in 1971.
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