The worldwide economy has been struggling for years, but it has gone largely unreported until recently. Growth and consumer spending has been steadily decreasing and investors are beginning to panic. More than half of world is now experiencing negative interest rates and former Federal Reserve Chairman Alan Greenspan was recently quoted as saying “its only a matter of time before negative interest rates spread to the US.”
Negative interest rates refer to a scenario in which cash deposits incur a charge for storage at a bank, rather than receiving interest income. Instead of receiving money on deposits in the form of interest, depositors must pay regularly to keep their money with the bank.
During negative interest rate scenarios people begin to hoard cash in order to avoid this charge from the banks. Additionally, consumers begin to spend less which slows down the economy and can lead to situations like hyperinflation. This largely occurs because companies continue to raise prices of their goods and services in order to achieve the same amount of revenue even though they are experiencing less sales.
The US economy has recently seen a bond yield curve inversion with yields on bonds reaching all time lows. A yield curve inversion occurs when short-term bonds pay more than long-term ones. Basically, any time there has been a yield curve inversion in the past, it has been an indicator that we are entering or already into a recession/depression.
These types of scenarios are so counter intuitive, unnatural and are a warning sign that something is not right. Can you imagine a scenario where someone would get paid 2% on their investment of 2 years but only 1.9% for investing for 10 years!!???
It makes very little sense to the rational mind, however investors still pour into these long term bonds because they are fearful of holding cash due to the risk of inflation. US treasury bonds are seen as one of the safest investments in the world, thus investors will still buy even when the price isn’t right.
All of these situations have historically occurred during times of recessions and depressions. And unfortunately, we are experiencing all of these scenarios right now.
During these times of economic crisis, there are very few places to turn to see returns on your investment. However, there has been one space that has historically always done well in this type of environment and that is precious metals.
Gold and Silver prices are up more than 20% since the start of the year and that number will continue to rise as more people begin to realize what is happening. Some of the most savvy investors will begin to rollover their IRAs and other retirement investment vehicles into gold backed IRAs to protect and grow their wealth and savings.
The first is Noble Gold Investments and the second is Regal Assets. Both are tremendous programs that allow you to invest in both individual physical precious metals products and IRA programs. Regal Assets even offers an alternative IRA program that allows you to invest in cryptocurrency like Bitcoin as well as precious metals in your IRA!
Bitcoin can also be a great hedge against these scenarios and as it is largely uncorrelated to the traditional financial markets. Bitcoin is seen by many as the preferred payment method of the world by many. Others actually see it as a replacement of the US dollar as the worlds reserve currency. If this were to actually come true we could be talking about a 8-9 figure or more Bitcoin!
If you’d like more information about precious metals or cryptocurrency you can also read our articles on precious metals and cryptocurrency. Both of these articles expose the secrets about these true forms of money that governments hope you don’t find out.
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