The US Federal Reserve and the European Union’s central bank recently announced plans to inject massive liquidity into their respective money markets. However, the Fed denies that its buying is another quantitative easing program while the ECB admits that it is.
Incredibly, a bank in Denmark is offering home buyers 10-year mortgages at an interest rate of -0.5%. Borrowers who opt for these mortgages will pay back less than the amount borrowed. This has come about because of the massive money creation by the world’s central banks.
In the irony of ironies, the central bank of Switzerland recently bailed out the manufacturer of the polymer material used in the new Swiss 10-franc notes. Swiss National Bank purchased a 90% stake in Landqart AG after the company got into financial difficulties. The SNB is known for its huge investments in equities, with Apple,
One of the reasons that gold and silver are safe investments is that today central bank printing of paper money is widely accepted. Additionally, there are no limits on how much money central banks can create. The graph shows the balance sheets of the European Central Bank, the Fed and the Bank of Japan. Note
Central banks to the rescue Just as the world’s central banks moved to rescue the banking system during the 2008 World Financial Crisis, they are now moving to rescue gold and silver investors, albeit the central banks are not rescuing gold/silver investors wittingly. Nonetheless, they are doing it just the same.
At CMI Gold & Silver Inc. we believe that central bank activity is driving the markets — the metals and the stocks. Expectations of loose money mean higher metals prices (in anticipation of increased rates of inflation) and higher stock prices (in hopes that the stimulus will fillip the economy). As for the latter, there