Gold or German 5-year bonds? Bobl or bouillon?
One of the main things investors hate about gold is that it yields nothing. Now it has company. German 5-year bobl yields on Friday fell to 0% for the first time ever.
German debt is priced in euros and with QE sounding more and more likely, the euro could be in for a spill.
Gold, meanwhile, held up well in the final quarter of 2014 and starts 2015 with a reversal to a $5 gain after touching a one-month low.
The first day of gold trading in 2015
Very few people who are holding bobls have the option to go into gold but the point is that we’re heading toward a zero-yield environment for safe assets everywhere and that puts gold on an even playing field. In that kind of environment, and with gold at the start of a strong seasonal period, there’s a case for buying.
On Friday, I spoke with a reporter at Kitco News about where gold is headed next.
“Today German five-year bonds yields went negative. Why would you pay the German government to hold your money when you can just invest in gold,” he said.
Button also said that there could be some bargain hunting in the marketplace as January has historically been a strong month for gold, especially for Asian markets, which will be celebrating the Lunar New Year in February.
“Not only is there a season factor to gold but it has been strengthening as China’s economy and middle class build,” he said. “I think you ride this wave through February to $1,300.”
