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Updated 07:42 25/09/20

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Will this spark the bond market to erupt?

Duncan Richardson, News Editor
25 Nov 2015, 4:02 p.m.

The big money is slowly selling their government bonds, which are possibly the most overvalued asset in the world. After a decade of endless of money printing and zero percent interest rates, nobody wants to be left holding the asset when inflation ignites. There is an estimated $6 trillion of government debt trading below zero which is remarkable considering core inflation is now 2.7%.

The Norwegian Pension Fund is quietly selling $860bn of government debt and investing the proceeds into commercial property in Paris, London, New York, San Francisco, Berlin, Tokyo and East Asia. Like precious metals property is seen a hedge against inflation. Property prices are also in bubble with London and Hong Kong the most overpriced real estate in the world.

M1 money supply, which includes all physical money and funds deposited in current accounts is rising rapidly. Austrian economists in west have been warning for years that QE would cause a rapid increase in the M1 money supply which would eventually lead to a hyperinflation.

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