Bond Market Bubble
A lot of people are worried about the turbulence of the stock market are moving their money to bonds. Why is that? Well in the event that the worst happens and there is a bankruptcy the bond holders get paid before the stock holders. So in a sense people move to bonds for safety. Historically bonds have done well in recessions. But there has also been a movement into bonds because interest rates have been so low. People have been so hungry for higher yields they have been moving money into lesser quality bonds the so called “junk bonds.”
We are starting to see world-wide debt tearing at the seams and some of the lesser quality bonds are starting to have problems as some of these organizations start defaulting.
You should take a look at the bond ratings but we believe you are going to see more defaults. People invest in precious metals for safety and to avoid counter party risk. People have been investing in the precious metals for thousands of years as a store of wealth and for safety.
Michael Pento, in his book The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market examines the coming bond market collapse in greater depth.
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