Good morning,

There isn't a whole lot in the RNS today but we do have:

Negative Interest Rates

Since the RNS doesn't have too many stories which interest me, I thought I'd spend some time reflecting on the fact that 10-year fixed-rate mortgages are now being offered at negative interest rates in Denmark.

If you go to the source for this story, you'll find that there are disclaimers: due to set-up fees and other costs, the Danish bank which is offering this deal says that "you are not exactly going to make money borrowing".

Even so, this feels like an escalation of the "ZIRP/NIRP" phenomenon. It is almost certainly unprecedented.

(For context: the Danish krone is pegged to the euro and its official interest rate is -0.65%.)

Bank shares have achieved little for investors in recent years and when you read stories like this, it's not hard to understand why.

Until recently, many economists thought that negative interests rates weren't possible. Why bother giving money to someone, if they'll give you less back?

That logic is still quite sound, in my view! Low interest rate environments do have real effects on people's decisions. We are discouraged from saving and incentivised to spend the money on present-day consumption, instead.

But even with very low or negative interest rates, not everybody can consume all of their savings straight away. There are plenty of institutions and individuals who need to wait some period of time before consuming their savings, or who are forced to lend their money for some structural reason, and these are the ones forced to suffer negative interest rates.

Rediscovering Gold

These days, almost anything looks like a better investment than cash and bonds. Any real asset is inherently superior to paper assets.

But when you consider the negative interest rates and the unprecedented monetary conditions, there are strong reasons, at least in my mind, to focus on the prospects for gold. 

The reason for this is gold's historical basis as a currency and as a foundation of currency strength.

This means that when central banks have stopped debasing their currencies and…

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