Don't Let Today's Rare Rates Pass You By

In today's Masters Series, originally from the February issue of Income Intelligence, Doc compares today's high-interest-rate environment with Europe's economy throughout the "Great Bullion Famine"... explains how you can capitalize on this rampant volatility... and discusses the impact of the Fed's inflation-fighting strategy on the bond market... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: [We still have time to take advantage of this rare opportunity](... The Federal Reserve has been hiking interest rates over the past few years in an effort to quell today's sky-high inflation. As a result, many investors have fled the markets in hopes of avoiding catastrophic losses. But Income Intelligence editor Dr. David "Doc" Eifrig says history shows you can still find ways to benefit throughout this bear market... That's why Doc believes it's critical for investors to understand how they can position themselves to profit from this ongoing volatility. In today's Masters Series, originally from the February issue of Income Intelligence, Doc compares today's high-interest-rate environment with Europe's economy throughout the "Great Bullion Famine"... explains how you can capitalize on this rampant volatility... and discusses the impact of the Fed's inflation-fighting strategy on the bond market... --------------------------------------------------------------- Don't Let Today's Rare Rates Pass You By By Dr. David Eifrig, editor, Income Intelligence Jacques Coeur was known as the "Merchant Prince of the Middle Ages." He's now considered one of the richest people of all time. But things didn't end well for the Merchant Prince... Under French King Charles VII, Coeur established himself as a court banker and entered the money-coining business. As Charles' master of the mint, Coeur controlled French coinage from 1435 through 1451. He was also named the steward of royal expenditure, and his family received noble status. Throughout this period, he used his wealth to start a trading empire, dealing in arms, furs, jewels, and more. The main business was to sail from Marseille out to the Atlantic and around to Bordeaux, or to Bruges, or down to Alexandria. He collected goods from the Levant in the Middle East and brought them back to France for sale. To undertake this mission, he needed a big pile of silver. Each shipload required an upfront investment of 3,000 to 4,000 marks. Coeur used his role as the creator of money to amass this wealth. As his argument was later described, "He would demonstrate that for each mark of silver, he had brought one mark of gold back to the kingdom." Amassing the silver wasn't easy... Money was in short supply. Coeur reported that twice he sailed into Valencia finding customers wanting to buy goods, but they simply had no money to do so. That doesn't mean they lacked the desire or even the wealth. They just didn't have the money. At the time, Europe suffered from the "Great Bullion Famine" of the 15th century. Europe, in the Middle Ages, was largely on a hard-money standard. Coins made of gold and silver facilitated trade, both locally and across borders. The trouble began as Europe ramped up its consumption of spices, dyes, and other goods from Egypt, Syria, and Cyprus. These imports grew faster than new silver and gold could be pulled from European mines (especially given a lighter workforce after the Black Death). In short, there just wasn't any money to trade. Folks went back to using black pepper as a unit of account, leading to German bankers being known as "peppermen." Other shopkeepers offered credit to customers by marking notches on sticks. Coeur's access to cash let him spend freely without such workarounds... amassing a monopoly on French trade and squeezing out the competition. And once he had so much of the money in France, he could lend it out at high interest rates. That was the Merchant Prince's downfall. Coeur's debtors included most of Charles VII's court... including the king himself. Those are powerful enemies to have. They jumped at a pretext to arrest him – a baseless accusation that Coeur had poisoned the king's mistress. Charles imprisoned him and seized his enormous wealth, and Coeur died a few years later. As Coeur's life demonstrates, 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. We're looking back to the late medieval period for a particular reason: The Great Bullion Famine caused one of the last major spikes in interest rates outside of a long, long decline. As we'll discuss, interest rates tend to move in one direction: downward. But amid that long-term decline, you'll also see temporary spikes that provide an opportunity to collect more income from cash. We're in one of those times right now. Today, I'll explain how you can take advantage of today's high interest rates... --------------------------------------------------------------- Recommended Link: [The Most Valuable Secret in Stansberry History?]( Only a few will remember it, but starting around 10 years ago, we detailed what might be the No. 1 investing secret of all time. Those on Wall Street even lobbied – successfully – for a BAN on talking about it because it didn't benefit them. Now, there's a big update. It's easier and potentially a lot more lucrative to do than ever before. Dr. David Eifrig has been waiting for this precise moment for more than 10 years. [Click here to see why](. --------------------------------------------------------------- If you haven't put much thought into the money you've pulled out of the markets, today's interest rates give you a reason to confirm you're getting a fair return on that cash. Mankind didn't settle for the new reality of the Great Bullion Famine. Instead, the cash shortage drove the discovery of new mining techniques and the exploration for new sources that included the New World. It took all the new silver mined from Mexico and Peru to end the famine. This money supply set interest rates back to normal. 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 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. During the Bullion Famine, there was no money. If you had some, like Jacques Coeur, you could demand a high rate of interest to lend. If you had a business or other enterprise that required investment, you had to pay dearly for capital. Today, we have mountains of capital and wealth built up since the Industrial Revolution allowed folks to produce more than they could 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, and 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 through time because of structural changes in the economy. This chart demonstrates that real rates (meaning rates after inflation) tend to lower by nearly two 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 – which is no easy task. The market's expectations for interest rates have been changing rapidly. In February, the market expected the Fed to hike to a peak of 5.4%. In March, that dropped dramatically to 4.8%, before rising again in April to 5.2%. You can see these different periods of expectations going into 2023 in the different lines in the following chart. Take a look... But all these expectations tell the same story... we're close to the peak in rates. That shift has hit the prices of both stocks and bonds. At the same time, markets place different interest rates on bonds maturing at different times. This is the yield curve. Currently, you can collect nearly 5% on a six-month or one-year bond, but only about 4.6% (per year) on a two-year bond and just 3.9% (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. These circumstances give you specific advantages as an individual investor – advantages that you should always be thinking about as you build your personal wealth. That means we can still uncover potentially great opportunities in the markets throughout these turbulent times... Good investing, Dr. David Eifrig --------------------------------------------------------------- Editor's note: Doc stepped forward last week to share a brand-new online presentation, revealing the No. 1 investing secret of all time. He went further into detail about how to take advantage of today's high-interest-rate environment, and much more. Plus, he shared how he invests the majority of his own money. [Click here to watch the full replay](... --------------------------------------------------------------- Recommended Link: [Gold Is SOARING... Here's the No. 1 Move to Make]( As the overall market volatility continues, the world's financial elite have started piling into the safety and security of gold. But if you're not taking advantage of a little-known way to invest for around $5 today, you're missing out. [Click here for full details](. --------------------------------------------------------------- You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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