Preparing For NIRP

[r3volution 3.0]

Personally, I'm not convinced that NIRP is coming to the US, or that it'll last where it's already been implemented.

I think they'll go back to good old fashioned QE - seems like a simpler way of achieving their objectives.

Regardless, NIRP might happen, and we ought to be prepared.

We can talk about investing, but I'm more interested in how we manage our day to day cashflow to avoid losses.

If the checking account is now costing you a % every month, what do you do? Cash your paycheck instead of depositing it, I suppose.

What if they ban or severely restrict cash (which would probably happen in an extended NIRP situation)?

At first, at least, there won't be many retailers accepting gold or other alternatives, you'd have to convert to dollars to buy things.

But the bid-ask spread for gold is too wide; it would eat up your savings.

The spread on paper gold is a lot less; is that the way to go?

Deposit paycheck, immediately buy GLD, then sell GLD as needed to make specific purchases, minimizing funds in bank account at any one time?

Thoughts?

[The Gold Standard]

I would trust paper gold about as much as I would trust a greenback. Silver and gold coins are the way to go. Hopefully they wouldn't outright ban cash and make it illegal to cash a check. I would have to figure out how to get paid in something else.

[r3volution 3.0]

I would trust paper gold about as much as I would trust a greenback. Silver and gold coins are the way to go. Hopefully they wouldn't outright ban cash and make it illegal to cash a check. I would have to figure out how to get paid in something else.

For investing, yes, but it could be useful as a way to park your regular income for short periods of time. If you converted your monthly paycheck into GLD or the like, and then converted it all back into dollars for spending/investing by the end of the month, there wouldn't be much risk. Even if GLD went to zero, you'd only lose a maximum of one month's income. The reason to use paper gold for this purpose is to avoid losses from the big bid/ask spread on physical, which would probably be more than the losses from NIRP.

[P3ter_Griffin]

I'm not sure if you've factored this in but most brokers charge a fee to get into and out of a trade, on top of the bid/ask spread. Probably would still eat less away than the spread on physical, but less than NIRP? A safe at home would probably be the cheapest route, if the banks do start charging a storage fee.

[r3volution 3.0]

I'm not sure if you've factored this in but most brokers charge a fee to get into and out of a trade, on top of the bid/ask spread. Probably would still eat less away than the spread on physical, but less than NIRP?

Depends, there's been talk of NIRP as deep as -4.5%.

A safe at home would probably be the cheapest route, if the banks do start charging a storage fee.

If cash isn't banned or overly restricted, that's definitely the way to go.

...which is precisely why they're likely to ban/restrict cash, under a serious NIRP regime. :-/

[P3ter_Griffin]

Depends, there's been talk of NIRP as deep as -4.5%.





If cash isn't banned or overly restricted, that's definitely the way to go.

...which is precisely why they're likely to ban/restrict cash, under a serious NIRP regime. :-/

I've seen a few articles on banning cash but I haven't taken the time to read one. Sounds like we're in for some potentially interesting times, so turn that frown upside down.

I'll try and think of other ideas but I'm not sure if I'll be able to top GLD.

[Chester Copperpot]

whats NIRP?

[The Gold Standard]

whats NIRP?

Negative interest rate policy.