Real Rates Drive Gold Higher

by Craig Hemke
Sprott Money

For as long as I can remember, I’ve stated that negative nominal and negative real interest rates are the key, primary driver for higher gold prices. And now we’re seeing this play out in real time.

First of all, what is the “real” interest rate? Simply put, it’s the nominal or stated rate of a bond minus the inflation rate. Here’s a definition from Investopedia:

[…] And here’s a link to the last article that we wrote on this subject, from late May of this year:…

Six weeks ago, real interest rates were falling as the Covid effect rippled around the world and economic output was slowing. In that post above, however, we argued that eventually this pattern would shift and the world would move toward stagflation and sharply negative real rates. We are still on course for this eventuality.

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