Rate accompli: Are rising interest rates bad for all assets?
Many Happy Returns
00:00
Why High Rates Are Bad for Gold?
When risk free rates are rising those assets are now relatively more attractive than risk assets aren't they? So why would I take risk now I can buy a government bond which is paying me five percent say. And that takes the shine off gold because if gold doesn't pay you an income and it's a wasting asset it doesn't generate income at all then you know it's value hugely decreases. It's interesting though isn't it because we tend to think of gold as the thing that is the safe haven in a bad economic environment but what we're saying is that high rates all else being equal are bad for gold.
Transcript
Play full episode
