The chief investment officer of the world’s largest asset management firm is recommending investors to hold some gold to protect themselves if central banks introduce aggressive monetary policy easing policies.
In a commentary published last week, Rick Rieder, chief investment officer of BlackRock, said that central bank action around the world has done little so far to push inflation back to 2% inflation targets.
He added that if central banks want to achieve that goal they are going to have to get a lot more aggressive, which means sovereign debt yields will fall further into negative territory.
Rieder said that market forces to push inflation have become ineffective because in the new digital age, consumer have instant access to market inflation.
This secular change in inflation means that central bank action has been ineffective, said Rieder. He added that the only other option central banks have to boost inflation is to debase their currencies.
Rieder said that an End Game where central banks actively debase their currencies will mean that bond yields have to go much lower and raise the threat of a global currency war.
In this potential environment, investors should look at investing in real assets like real estate, and global monetary assets like gold. He added that he also likes dividend-yielding stocks.
The ECB already changed their monetary policies to save Italy from derailing into a bankruptcy. Now in Europe lending money pays interest, while saving money has been turned into debit interest.
Kitco / ABC Flash Point News 2019.