{"id":26777,"date":"2019-07-01T04:00:26","date_gmt":"2019-07-01T11:00:26","guid":{"rendered":"https:\/\/goldco.com\/?p=26777"},"modified":"2022-12-29T13:30:05","modified_gmt":"2022-12-29T21:30:05","slug":"amount-negative-yielding-debt-outstanding-continues-increase","status":"publish","type":"post","link":"https:\/\/goldco.com\/amount-negative-yielding-debt-outstanding-continues-increase\/","title":{"rendered":"Amount of Negative Yielding Debt Outstanding Continues to Increase"},"content":{"rendered":"<p>Debt issuance has always been pretty straightforward. A borrower issues bonds that pay interest to entice lenders to part with their money for a period of time. The longer the term of the bond or the riskier the borrower, the higher the interest rate the borrower has to offer. But thanks to over a decade of quantitative easing from central banks that drove interest rates in many countries below zero, a massive amount of debt in existence today has a negative yield. That means that lenders are paying borrowers for the privilege of purchasing their debt. And that bizzaro-world effect shows no signs of abating anytime soon.<\/p>\n<p>Thanks to <a href=\"https:\/\/www.nytimes.com\/2019\/06\/21\/business\/economy\/fed-trump-interest-rates.html\" target=\"_blank\" rel=\"noopener noreferrer\">expectations that the Federal Reserve will start cutting the federal funds rate<\/a> next month, yields on bonds have been plummeting around the world. And while $12 trillion of debt worldwide had been yielding negative interest rates last week, over $700 billion of negative interest rate debt was added to that total in a single day and over $1 trillion for the week, <a href=\"https:\/\/www.zerohedge.com\/news\/2019-06-20\/global-negative-yielding-debt-hits-record-123-trillion\" target=\"_blank\" rel=\"noopener noreferrer\">pushing that total to over $13 trillion<\/a> of negative yielding debt.<\/p>\n<p>Step back and think about that for a second. Investors have purchased over $13 trillion of bonds that they have to pay to hold. They could stick that cash under the mattress and get a better return, but they\u2019re so fixated on holding financial assets that they\u2019re willing to take a guaranteed loss just to hold bonds.<\/p>\n<p>That\u2019s an indication that not all is well with the economy. Essentially investors are willing to pay borrowers in order to take a guaranteed loss of a few basis points, rather than continue to hold other financial assets such as stocks that could lose even more in the coming months.<\/p>\n<p>One has to wonder why they don\u2019t just <a href=\"https:\/\/goldco.com\/gold-ira\/\" target=\"_blank\" rel=\"noopener noreferrer\">hold gold instead<\/a>. Gold has seen an incredible 2019 so far, starting the year under $1,300 per ounce and now hitting around $1,400 per ounce. Investors who had the foresight to get into gold when it was still cheap are seeing returns of 9% so far this year, with more yet to come. Why pay to hold someone else\u2019s risky debt when you can make money with gold instead?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Debt issuance has always been pretty straightforward. A borrower issues bonds that pay interest to entice lenders to part with their money for a period of time. The longer the term of the bond or the riskier the borrower, the higher the interest rate the borrower has to offer. But thanks to over a decade [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":32450,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[207],"tags":[],"class_list":["post-26777","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.8 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Amount of Negative Yielding Debt Continues to Increase &#8211; Goldco<\/title>\n<meta name=\"description\" content=\"Investors have bought over $13 trillion of negative yielding debt, meaning they&#039;re paying to invest in it. 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