With Trump win comes expectations for interest rates to rise ‘bigly’

“Bigly”—that’s the new projection for the jump in U.S. interest rates among some analysts.

Those analysts leaned on President-elect Donald Trump’s sometimes vernacular twist on the English language (Trump’s camp said he really said “big league” that day) to describe the move up for rates that they believe could be ushered in with Trump administration policies. Trump’s ideas, based on campaign rhetoric and speculation, could see a fairly easy route to passage with a Republican-controlled Congress.


Gold Soars as Investors Seek Haven Following Brexit

Gold prices soared on Friday, after Britain’s decision to leave the European Union sent investors flooding into safe-haven assets.

Gold for August delivery was recently up 5.2% at $1,328.20 an ounce on the Comex division of the New York Mercantile Exchange. Gold prices spiked as high as $1,362.60 on Thursday night, hitting the highest level since March 2014.  Read More

Denmark urged to drop negative interest rates

Following four consecutive years of negative interest rates, the International Monetary Fund (IMF) has urged Denmark to act in order to avoid a potential housing bubble.

No country has had negative interest rates for a longer period of time as Denmark has. Apartment prices, which increased by 11.6 percent between February 2015 and 2016, have risen by over 50 percent since 2009

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Are Dividend Stocks the answer to Negative Interest Rates?

Tony Sagami of Mauldin Economics believes a NIRP policy in the US will happen.  The NIRP club now includes Japan, the European Central Bank, Switzerland, Denmark, and Sweden.

Negative Interest Rate Club
The NIRP club now includes Japan, the European Central Bank, Switzerland, Denmark, and Sweden.

Traditional fixed-income investors in bonds and CDs are finding it more difficult than ever to get a decent return on their money.Are dividend stocks the anwser?   The dividend yield for the S&P 500 has increased to 2.25% as of the start of 2016. The yield on the 10-year Treasury bond has dropped to below 1.8%.

That means the dividend yield on the S&P 500 is now 50 basis points (27%) higher than the bond yield.



Gold up 16 Percent this Year but Invest Cautiously

Eric Bretan co-owner of Rick’s Estate & Jewelry Buyers in Punta Gorda and former senior derivatives marketer and investment banker for more than 15 years at several global banks writes about his surprise at gold’s price increase this year.

The end of 2015 looked bleak for gold prices.  The Federal Reserve had raised interest rates and was expected to continue doing so throughout 2016.   The global economy also seemed to be improving and central banks were going to ease up on their stimulus programs.  So what happened?   Just about the opposite of what was expected above.

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Top Gold Stocks of 2016 (so far)

Money Morning released a list of top performing gold stocks for the year.  They point out that gold has gained 20% over its low in the 90 days prior in the first 3 months of 2016 and that the gains might be only begining

Top Performing Gold Stocks of 2016 (so far):

1: QMX Gold Corp (CVE: QMX)
2: Barrick Gold Corp. (NYSE: ABX)
3: AngloGold Ashanti Ltd. (NYSE: AU)
4: Newmont Mining Corp. (NYSE: NEM)
5: Goldcorp Inc. (NYSE: GG)

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The Madness of Negative Interest Rates

Article by By Richard W. Rahn of Washington Times

Negative, zero or very low interest rates encourage people to buy much more expensive homes than they normally would, which is to their benefit until interest rates rise. Despite stagnant economies many European cities are experiencing a rapid rise in home prices largely because of low interest rate policies. This real estate bubble cannot be sustained, so at some point it is going to all come crashing down.

Negative or low interest rates from central bank actions misallocate capital from its highest and most productive uses, resulting in lower economic growth and job creation. The present madness began with the mistaken belief that monetary policy could be used to solve problems caused by too much government spending, taxation and regulation. At some point, there will not be enough savers to continue to agree to accept negative rates on their savings (after inflation) to support all of the government spending, and the game will be over. And those responsible for the madness will blame others.

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Examining the Gold Trade for the Second Quarter

The stock market has taken investors on a roller coaster ride so far this year, starting off with a steep drop and now rising once again to possibly test historic highs. Global macroeconomic concerns centered on China’s economy and the ongoing struggle in the oil trade have contributed to the volatility. But the uncertainty in the markets has been a boon for one shimmering precious metal.

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Negative Interest Rates Are Good For Gold, Utilities, REITs and Bonds

John Carter notes that gold rose 15% in Q1 2016 which is the largest quarterly gain in 30 years.   In the current environment of negative interest rates, people in Japan are parking their money in gold.   Are negative rates coming to the US?   Maybe.  Read More

John F. Carter’s TradeStation Chart of gold (GC), utilities (XLU), REITs (PSA), and bonds (TLT) all responding favorably in a negative interest rate environment.
John F. Carter’s TradeStation Chart of gold (GC), utilities (XLU), REITs (PSA), and bonds (TLT) all responding favorably in a negative interest rate environment.