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Money & Markets – Savers Beware: Real Yields Hit New Lows – But That’s Great for Gold
Article by Matt Badiali in Money & Markets
Savers beware: U.S. “real” yields are at a new low. And while that’s bad for cash, it’s the recipe for a gold bull market.
The “real” yield, is the U.S. 10-Year Bond yield minus inflation. So how much would your money be worth in 10 years invested in a U.S. bond? Turns out, you’d lose money, -0.6% to be exact.
I remember receiving a $50 savings bond for winning a poster contest in the fourth grade. Today, by the time I went to cash it in, it would only buy me $49.40 worth of stuff.
That’s why gold looks like a fantastic position today. It stands to benefit as the dollar continues to languish.
The Gold Bull Market Is On
If you look at a simple, two-year chart of gold, you can see it’s in a bull market
On the back of these historically low yields, the gold price is near a nine-year high. However, what few investors realize is that the gold price actually beat the S&P 500 over the past three years. And it will do so again in 2020!
If you bought an ounce of gold in June 2017 and an equivalent amount of the S&P 500, you would be up 40% on your gold position and just 27% on your S&P 500 position.
Similarly, if you invested in both on Jan. 1, 2020, you are up 15% in gold and down 4% in the S&P 500.
The price of gold will eclipse its 2011 high, possibly by the end of 2020. Imagine how high it could go over the next two years. So, if you don’t …
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