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Weekly Touchpoint: Analyst: Negative Interest Rates “Terrifying”

Posted By Isaac Nuriani |

When it comes to healing an economy, just how much can a central bank do before there’s a danger of the treatment becoming worse than the disease? Many experts believe central banks have gone much too far with quantitative easing (QE) measures since the 2008 financial crisis. For example, global banking giant J.P. Morgan says QE has “laid the foundation for the next crisis.” And now there’s talk that America’s current profile of massive debt and low interest rates means the Federal Reserve will have no choice when the next recession hits but to implement interest rates so low they actually go negative. One analyst says negative rates could prove catastrophic for the U.S. economy (see below). Is your portfolio ready to withstand the effects of such a potentially chaotic financial environment? You may be one step closer if physical gold and silver can be counted among your assets.

  • As talk of a recession grows, so does the chatter about negative interest rates. If the Federal Reserve goes to negative interest rates to jumpstart the economy, it likely would be seen as a stunning and extraordinary measure in the U.S. Negative interest rates are no longer unusual in Europe and Japan, but the mechanism has benefited those nations very little. That is what has analyst and author John Rubino so worried about the measure’s implementation in the United States. Negative rates make it so money is profitable to borrow and unprofitable to hold, which ideally should prompt people and companies to spend it, creating an economic explosion. Yet Europe and Japan still see anemic sub-2% annual growth. Rubino says this not only ensures already-dangerous debt-to-GDP levels will keep rising, but increases the likelihood that a wave of bad debt will crush financial markets or that currency-killing hyperinflation will set in. For more on why Rubino sees the prospect of negative interest rates coming to America as “terrifying,” read his piece over at Dollar Collapse.
  • Although at Augusta we usually concern ourselves only with gold and silver, it’s worth noting what a U.S. congressman recently said about another alternative asset – digital currency – and why he’s trying to make it illegal. A Forbes article cites the concerns of Congressman Brad Sherman (D-CA) that bitcoin and other cryptos threaten “U.S. international financial power.” The congressman recently introduced a bill that would actually ban bitcoin and other digital currencies in the United States. This says a great deal about the degree to which the Washington political machine wants to maintain the power that the Federal Reserve and fiat currency system gives to elites. Former congressman and gold advocate Ron Paul weighed in on Sherman’s effort, pointing out that Sherman’s concern is rooted in bitcoin’s ability to “challenge the status quo of the monetary system,” something gold does as well – and Paul and many others believe it’s in our collective interest that the monetary system’s status quo IS challenged.
  • We ponder whether a tree that falls in the woods without anyone hearing really makes a sound. In a similar way, it’s worth pondering whether a gross domestic product (GDP) that gets stronger due only to the manic use of debt is really growing. According to one of the world’s most famous analysts, not only is that precisely Uncle Sam’s secret to economic “expansion” over the last several years, but the U.S. economy actually would have been shrinking if not for all the borrowing. What could really be lurking behind the supposedly robust U.S. economy? And what steps could you take to help your portfolio stay safe if all this growth really is just a mirage? We share some ideas about that in Augusta’s latest blog article here.

When it turns out that an economy boasting 4% unemployment and interest rates at record lows is actually shrinking, it’s time to give serious thought to disasters that could be lurking around the corner. Fortunately, physical gold and silver have a record of growing significantly during just the sort of dire economic climate some say could result from America’s current real financial condition (including potential negative interest rates). If you have been thinking about adding – or adding more – physical gold and silver to your portfolio and have questions, or would like to know more about a gold IRA, call Augusta Precious Metals at 855-242-4121 or visit for assistance.

Augusta cannot guarantee, and makes no representation, that any metals purchased by a customer will appreciate at all or appreciate sufficiently to make a profit, and there is no certainty that any metals can be sold for a profit. The future value of the coins you purchase cannot be predicted. You could lose money. Don't purchase Augusta products with money you can't afford to lose. Prices may rise and fall over time or rapidly. Past performance of any coin does not guarantee future results. Premium coins are sold for more than the value of the precious metal they contain. Augusta's prices and buy-back prices are determined and controlled by Augusta. This purchase is speculative and unregulated.