Thursday, July 14, 2016

Even insurance companies are buying gold to protect their capital as bonds become negative

Insurance companies use the monies they acquire from policy holders to grow their capital to support needed claims, as well as expand their business.  For publicly traded insurance companies this is vitally necessary to help them comply with their fiduciary responsibility to shareholders, as well as to earn enough profits to give out dividends or be able to lower premiums for their customers.

A major investment tool that insurance companies have used for years to grow their capital has been the bond markets.  But with these markets residing in an environment of both zero and negative interest rates over the past decade, many are faced with having to find a new form of asset or security to ensure their capital is protected, and that some modicum of growth is created.

So in light of this, some insurers and re-insurers are turning to gold to supplement their investing.

How do you know when the world’s economic, financial and monetary systems are in trouble? 
Answer: When re-insurance companies, whose sole purpose is to insure other insurance companies, start to panic into gold and begin hoarding cash it’s probably a reliable signal that things aren’t going as well as our central bankers’ best laid plans imply. 
That’s exactly what’s happening right now: 
A real paradigm shift is taking place in the markets…  Even one of the world’s second largest re-insurers is now buying physical gold… They’re even adding physical cash… This is the insurance industry’s insurance company… They are the risk experts and they now are buying physical gold bullion and storing physical cash… The importance of this move is possibly the most significant flow of capital that you will see in your lifetime… - SHTF Plan
Insurance is a $1.2 trillion industry, and that does not include re-insurers or other complimentary businesses that function within this environment.  And if a critical mass of them decide to turn to gold to hedge against the loss of interest they formerly got from purchasing bonds, the gold markets would dry up in a flash, and the price would skyrocket far beyond all-time highs.


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