Bonds – “Supernova… Will Explode”

Following on from yesterday’s article of yet another billionaire warning of what is coming and buying gold, the undisputed “King of Bonds”, Bill Gross who headed up the world’s biggest bond fund, PIMCO, has intensified his call that we are going to see a massive failure on the bond market.

The prompt, as we discussed in Friday’s Weekly Wrap podcast, is that last week saw the historically unprecedented milestone of negative yielding government bonds surpassing a staggering $10 trillion dollars.  That means we have around a third of all global government bonds in negative yield territory.  Yes, you PAY for the privilege of buying government issued debt!  That means that investors around the world are so scared of losing capital in a coming crash that they not only will forego yield income, as you do with gold and silver, but you will pay a ‘yield’ as an expense.  These are not third world counties either.  It is the likes of Japan, Germany, Italy and France to name a few.  That bonds continue to somehow have ‘safe haven’ status given how precarious this all is, is nothing short of dumbfounding blind faith in government.

So what did the Bond King have to say?

“Global yields lowest in 500 years of recorded history”… “..$10 trillion of negative rate bonds. This is a supernova that will explode one day.”

Topically we remind you of 2 famous quotes from some gentlemen you may remember:

“Betting against gold is the same as betting on government – He who bets on governments and government money bets against 6000 years of recorded history” – Charles De Gaulle

“You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold.” – George Bernard Shaw