Why Gold Will Rise Regardless of Interest Rate Decision

12.10.2016 • Gold and Natural Resources

From Kris Sayce – Port Phillip Insider (Australia) –

Expectant investors will be pleased to know that the Australian Office of Financial Management (AOFM) successfully offloaded $7.6 billion in government bonds to a bunch of suckers.

Have a cigar.

You’re probably among those suckers if you have any exposure to bonds in your managed funds.

The price the government will pay for this debt? A miniscule 3.27% per year for 30 years.

At that rate, if you’re interested to know, the government will pay $7.5 billion in interest to, ahem, lucky investors. That is, of course, on top of the $7.6 billion principal it must repay in March 2047.

Not that $7.6 billion in 2047 will be worth what $7.6 billion is worth today. If the government and Reserve Bank of Australia get their way and inflation runs at a constant 2% over that time, $7.6 billion in 2047 will be the equivalent of $4.2 billion today.

Now can you see why governments like inflation and low interest rates?

-Subscribe to learn more at portphillippublishing.com.au (Paywall)(English)-

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