We're in a Rare Age for Income Investors

Editor's note: Today in Empire Financial Daily, our friend and colleague Dr. David Eifrig from our corporate affiliate Stansberry Research is back – this time, to share why the conventional wisdom while saving for retirement doesn't always work out... The supply and demand of money can have powerful consequences... Interest rates seem like a background […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Editor's note: Today in Empire Financial Daily, our friend and colleague Dr. David Eifrig from our corporate affiliate Stansberry Research is back – this time, to share why we're in a unique period of time to take advantage of some incredible opportunities in income investments... --------------------------------------------------------------- We're in a Rare Age for Income Investors By Dr. David Eifrig --------------------------------------------------------------- [The only money-making acronym you need to know for 2023]( Soon, the acronym "PVAB" could be as commonplace as "ASAP" or "TGIF." But if you don't know it yet, you're not too late... By the time it fully rolls out, PVAB will have a bigger lasting impact on our society than the Internet. That's why some of the biggest names in the business – from Bill Gates to Jeff Bezos and Elon Musk – are pumping billions into it. To see how you can get massive returns from what could well be the biggest investment opportunity of this year, [click here now](. --------------------------------------------------------------- The supply and demand of money can have powerful consequences... Interest rates seem like a background feature of our lives, but they both reflect and drive major shifts in history... and your wealth. The "Great Bullion Famine" of the 15th century was one of those turning points... Europe, in the Middle Ages, was largely on a hard-money standard. Coins made of gold and silver facilitated trade. But as Europe demanded more spices, dyes, and other goods from Egypt, Syria, and Cyprus, these imports grew faster than Europe could mine new silver and gold. In short, there wasn't any money to trade. One wealthy man of the time – Jacques Coeur, the French master of the mint – used his immense access to cash to get a monopoly on French trade. Once he had so much of the money in France, he was able to lend it out at high interest rates (until his debtors had him imprisoned). You might ask why we're looking back to the late medieval period. It's for a particular reason: The Great Bullion Famine caused one of the last major spikes in interest rates... before a long, long decline. As we'll discuss today, interest rates tend to move in one direction: downward. But amid that long-term decline, temporary interest-rate spikes can give us an opportunity to collect more income from cash. --------------------------------------------------------------- Recommended Link: [Have you heard of 'SWaB'?]( More than 100 countries around the world are rolling out a system called "SWaB" that could have a bigger impact than the Internet in the days ahead. Here in the U.S., it's already being implemented in 38 states and counting. This year, massive investments are pouring into this innovation from some of the richest people in the world – like Elon Musk, Jeff Bezos, and Warren Buffett. Even the world's most powerful companies, like Apple, Microsoft, and Google, are spending billions to onboard it. That's because every single modern technology – 5G, artificial intelligence, blockchain technology, IoT, robotics, quantum computes, and EVs will have to switch over to SWaB to stay relevant. [Get the details here](. --------------------------------------------------------------- We're in one of those times right now... While interest rates seem like a complex, confusing, and ephemeral feature of the financial world, they represent one simple thing: the price of money. If you need money to invest in a business or to fund your lifestyle, the price you pay is the interest rate. If you have money and would like to "sell" it to others in the form of a loan, you get paid the interest rate. And like all prices, the interest rate is set by the supply and demand of money. When money dries up, the folks who have money can demand a high rate of interest to lend. If you have a business or other enterprise that requires investment, you have to pay dearly for capital. Today, we have mountains of capital and wealth built up. The Industrial Revolution allowed folks to produce more than they can consume. The folks who manage institutions, sovereign wealth funds, pensions, and more are all searching for productive places to put all this money. At the same time, we have only so many productive uses of capital. There are only so many factories to be built and businesses to be funded. Wealth has grown faster than production. That's what's driving interest rates lower... in what the Bank of England calls an 800-year "suprasecular" decline. That means interest rates don't exhibit the back-and-forth fluctuations of a financial market... Rather, rates head lower and lower over time because of structural changes in the economy. This data from the Bank of England demonstrates that real rates (meaning rates after inflation) tend to decrease by nearly 2 basis points per year, going back to 1317. Take a look... The Bullion Famine was an exception – and it represents one of the last periods of sustained higher rates before the decline took hold. In the modern world, the Federal Reserve and other central banks have the power to create (or destroy) money and alter its supply and demand. Private banks also have the power to create and destroy money through fractional-reserve lending. (Innovations that help lenders spread risk or monitor borrowers have also led to lower rates.) While many lament central banks' "manipulation" of the market, it's better than being at the mercy of the amount of gold and silver being discovered and mined. On the other hand, it means modern traders and investors are all trying to divine the short-term direction of interest rates – no easy task... Recently, the market expected the Fed to undergo a few more rate hikes to bring rates from 4.5% to a peak of 4.75%, then have them fall. But the economy has remained strong. And the market now thinks the Fed will hike more and go higher to 5.25%. That shift has hit the prices of both stocks and bonds... driving yields higher. At the same time, markets place different interest rates on bonds maturing at different times. This is the 'yield curve'... Currently, you can collect roughly 5% on a six-month or one-year bond, but only about 4% (per year) on a two-year bond and just about 3.5% (again, per year) on a 10-year bond. This runs counter to the "normal" scenario, in which locking up money for the short term brings you lower interest rates than it does over the long term. This situation is called an "inverted" yield curve. It means that the market is concerned about the future and expects lower rates of economic growth down the road – and thus is willing to accept lower interest rates on bonds maturing, say, 10 years out. If you isolate the difference between the two-year rate and the 10-year rate, you can make a chart showing just how dramatic the inversion is, even compared with the fearful periods of 2008 and the dot-com recession. Rates aren't going to stay this way for long... Put it all together... - Over broad history, rates tend to go down. - Interest rates are close to what will likely be the short-term high. - You can earn higher rates on short-term bonds than longer-term bonds. This leads to something important... Rather than the 0% to 1% you would have earned on bonds a couple years ago, you can get 5% with no risk today. We're in a unique period of time. The opportunities for income investments are unlike what we've seen in recent years. Make sure you take advantage of them. Regards, Dr. David Eifrig April 14, 2023 Editor's note: In a brand-new presentation, Doc is sharing how you can turn today's environment of high inflation, high interest rates, and a choppy economy to your advantage. In fact, he says this strategy is exactly what he does with the majority of his own money. [Learn more here](. --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2023 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 1125 N. Charles Street, Baltimore, Maryland 21201 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](