A Glance at Major World Treasury Bonds Paints an Increasingly Negative Picture

This article was submitted by Addison Quale, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.

Peter Schiff has stated clearly for the record that this financial system is headed towards collapse. While many like to point at inflation as the key indicator to pay attention to, we have been offering another: interest rates.

Indeed, the pathologically falling interest rates taking place across the world are more of a signal that this system is headed for collapse than inflation, which we also believe will have its day. In other words, the mainstream economic commentators who keep telling us to get ready for rising rates are dead wrong.

This recent article provides a detailed explanation as to exactly why this is happening.

Interest rates should be in equilibrium. Pushed down by entrepreneur-borrowers who can’t stomach high rates and savers who won’t lend their savings to banks for low rates, interest rates should remain moderated. That’s how rates would function in a truly free market.

Instead they are out of control. Where they used to maintain a steady consistent level, they now swing to extremes. First, they skyrocketed to extraordinarily high levels (1980). And now they are plunging towards extremely low levels, and even into negative territory.

Negative interest rates are one of many reasons to buy gold now. Download SchiffGold’s Free White Paper: Why Buy Gold Now?

This was all set in motion when FDR started pulling the US off the gold standard in 1933, and it kicked into high gear when Nixon put the final nail in the coffin in 1971 when he “closed the gold window” (temporarily, of course) which de-linked the US dollar from gold.

Now that our monetary system is completely disconnected from real money – i.e. gold – interest rates are totally unmoored and out of control. The next stop is oblivion (i.e. negative rate territory across the board) and the beginning of the implosion of our financial system.

Here is what 10-year sovereign bond yields look like on a global scale (as of last year). As you can see, there is a clear trend.

And here is a snapshot of major government 10-year treasury yields as they currently stand:

As you can see, three major 10-year government bonds (Euro, Swiss and Japanese) are in negative territory already. And Germany, France and the Netherlands aren’t too far behind. Time will tell which one of these will be the next to fall. But, make no mistake, fall, they will. And when the US 10-year clocks in at sub-zero, the stuff may be about to hit that proverbial fan.

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