Negative Nominal Rates

I happened to cough up a very good article on negative nominal rates in Japan in 1998:

NY Times - Japan's Negative Interest Rates

http://ow.ly/lbw0q

So it has happened before. And I see that Japan has inflation-indexed bonds, or real return bonds.

Strange to say that Sprott with their massively usurious interest rates, lending to small producers wants them to act, as it were, as a real return bond.

Gold miners will act as a real-return bond, but only on the basis that they pay dividends. To yoke these small businesses with interest rates far above credit markets is no different than the effect heavy taxation would have on the sector as a whole.

If Sprott were really that concerned about inflation per se, they could easily obtain the same by obtaining Canadian long-term Real Return Bonds, but you would wait until negative nominal rates at the short end of the yield curve were a reality to assess.

Strange to say that real return bonds in the United States, or TIPS are yielding negative rates, with the exception of the long-dated treasury. That means there's a very, very high expectation of inflation going forward, though it has not yet occurred.

Sprott's mistake is believing all of the hyperinflationist fringe gobbledygook(especially the bilge about silver) out there on the web and trying to impose it on the market, and looking for small producers to fulfill the role of a real return bond.

Would you buy Real Return Bonds in any denomination right now? Meh, you would buy gold in case of devaluation. Better still, you would buy a gold miner because they would be ready to provide the bullion.

-F6