by Craig Hemke
Sprott Money
Inflation-adjusted interest rates remain sharply negative, yet the COMEX gold price remains down on the year. On a historical basis, this is a very odd divergence, and it sets up an interesting trade as we move toward 2022.
Much has been made of the current drop in inflation-adjusted or “real” interest rates. And what are real interest rates? The rate of return a bondholder sees once inflation and loss of purchasing power is taken into account.
In its simplest form, subtract the annualized inflation rate from the nominal interest rate. See below: