We may have to rename the global bond market to ‘Fast and Furious -1.0’ because that is exactly what is happening to the expanding amount of sovereign bonds in both Europe and Japan. Last week, bonds with a negative yield were estimated to be about $11.5 trillion, and just one week later, that amount has grown by 11.5% to now be around $13 trillion.
And the newest member to join the negative yield club are the Dutch, who’s Netherlands sovereign bonds for the first time fell to negative yields.
The U.S. is one of the few Western economies that still has a positive yield bond for their 10 and 30 year notes, but even these debt instruments are falling fast as much of the world rushes into the Treasury to escape holding their money in other failing assets. In fact, over the past seven days the 10 year Treasury has set at least three records for lowest yields in history, and this will only continue to drop as more and more investors seek the limited window of safe haven that the dollar provides in its 1.3% return.
The smart money however is not going into bonds, but is instead rushing into physical gold and gold ETF’s. A new report out from Japan shows that a consortium of high-level investors have bought physical gold and are storing in in vaults in Switzerland. And in the paper gold markets, large amounts of gold has had to be purchased to support the rush into the gold ETF’s, which are the lazy man’s way to protecting wealth in precious metals.
Since the beginning of the year, gold has been the best performing asset in the global economy, while increases in debt are leading central banks to rush headlong into a full money printing frenzy. And when people and governments are willing to buy debt at negative rates simply to get their money out of equities and banks, then you know that the insiders realize a new financial crisis is coming, and don’t want to be anywhere near a place where their wealth can be taken for a bail-in, or outright confiscated to fund their insolvent governments.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com,Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.