The Jackson Hole Jolly For Central Bankers And The Ramifications For Gold
Friday, August 23, 2019 at 04:52PM
Gold Prices

Preamble

Investors and speculators alike awaited with bated breath for the latest meeting of the central bankers to be concluded. Given a less than positive economic future the bankers are looking to more financial stimuli in an attempt to cushion the upcoming recession. 

Some news outlets have reported that there is now $16 trillion worth of global negative interest rate debt. Who in their right minds invests their hard-earned cash in a dead certainty of a loser? A pension fund that is paying out at a rate of 5%-6% is reliant on an investment that has a negative return, how long can that go on, frankly its beyond me.

For the Danes there is a benefit in that there are now negative interest rate mortgages in Denmark. A Danish bank has launched the world’s first negative interest rate mortgage giving out loans to homeowners where the charge is minus 0.5% a year. Jyske Bank has begun offering borrowers a 10-year deal at -0.5%. Jyske said; “We don’t give you money directly in your hand, but every month your debt is reduced by more than the amount you pay,” said Jyske’s housing economist, Mikkel Høegh.  This is a ‘first’ in my lifetime and it is a far cry from the 1979 period when the base rate in the UK was around 18% with mortgages a few percentage points higher and we all struggled like crazy to maintain a roof over our heads.

These are truly unchartered waters and treacherous to navigate as we are all on this journey into the unknow.

 

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