A few assets remain safer options as more central banks adopt the unorthodox policy.

By Tatiana Darie

With volatile global financial markets, and more central banks turning to negative interest rates, it can be hard to think of a reliable place for your money these days.

Economic weakness around the globe has weighed on U.S. growth, but Federal Reserve officials have repeatedly said that pushing interest rates below zero here is still premature. Chair Janet Yellen said the central bank is re-examining negative rates as a policy tool if the economy stalls.

In Japan, the euro zone, Switzerland, and other countries that have adopted sub-zero interest rates, banks are charged for parking their cash reserves at central banks. The idea is to force them to lend more of it out to consumers, with the hope to spur spending and stimulate growth. The worry is banks would pass the associated costs onto borrowers.

So how can investors protect their money in this environment? Here are some thoughts from a few investment strategists.

Gold

Bullion’s zero yield shines relative to other money-losing assets. Gold is up 15 percent this year at $1,219 an ounce amid concerns that central bankers are losing their grip on the global economy.

“Gold obviously doesn’t pay a dividend but at the same time, it doesn’t devalue either with regard to itself,” said Axel Merk, president and chief investment officer of Merk Investments LLC, whose fund owns physical gold. While the price of the precious metal can rise and fall in international markets, said Merk, a central bank can’t debase it and its purchasing power isn’t reduced through inflation.

This excellent article was originally published here – http://www.bloomberg.com/news/articles/2016-02-26/where-can-investors-hide-from-punishing-negative-rates

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