Nominal minus inflation
A is the nominal rate minus . A 5% bond with 3% inflation offers roughly a 2% real return. A 3% bond with 5% inflation offers −2%.
Historically, gold has often done better when real rates are low or negative, because cash and bonds lose purchasing power. Analysts often watch 10-year U.S. yields as a proxy.
Educational example
Nominal rate 4%, inflation 6% → real rate ≈ −2%.
Key takeaways
- Real rate ≈ nominal rate − inflation.
- Low or negative real rates have often supported gold.
Knowledge check
Nominal 4%, inflation 1%. Real rate ≈
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