Gold this week has corrected upwards and is continuing in its bull market trend. The media and market manipulators have been doing everything they can to suppress the gold surge, including margin hikes. Of course it makes no sense that gold would see a pull back now as central banks, including ones in charge of safe haven currencies like the Yen and Swiss Franc, are all engaging in currency intervention. The bank of Japan is using quantitative easing to blunt their currency appreciation and the Swiss are cutting rates.
The gold market also sees right through the phony hikes passed this week in congress. Even if the increase cuts did happen, 1 year of new debt will match 10 years of alleged savings. This new debt is highly inflationary and has some analysts putting the new gold target at $1,950 in order to match the new debt ceiling (debt target).
Currently, rating agencies are saying that 4 trillion dollars of cuts are needed to control the economic situation. The problem we see here at CrushTheStreet.com is that even if we did cut 4 trillion, we would still have ballooning deficits and debts. Congress by the way used a 4% GDP growth for 2011 in order to project income expectations, last we checked we were on pace to print at less than 1%. As you can see, the entire debt ceiling package was one big LIE from day 1!
Some serious facts about the August Debt!
America is at a point right now that if it doesn’t borrow, it defaults. As if that isn’t bad enough, America is borrowing to pay principle and interest on borrowed funds. In August alone–yes this month right now, the government will have to reconcile approximately 500 billion in loans that are maturing. That’s not even counting the 159 billion that the country is going into the hole this month alone. There is approximately 3 trillion dollars in debt that will be maturing over the next 4 years alone and the government’s compromise has only shaved off about 2 trillion over the next decade. The government has no other choice but to continue to borrow to slowly destroy everything in the way that they do best. In all fairness, we’re already chemically dependent on our “debt coke” that it almost makes no sense to stop snorting at this point and killing ourselves through prudence and healthy choices.
The markets have been melting down this week. The uncertainty and the frustration in Washington are being transmitted to investors and the markets are reflecting this. Just today, stocks were down around 4.5 percent with a continuation of fear and lack of trust as to what the U.S. is going to do and how the economy is going to recover. Isn’t it amazing when people question the future of the stock market, the answers they seek are from the most fraudulent and inefficient entity of them all–which is the government. It’s not people’s ignorance that they do this; it’s the system that has been put in place that without a doubt is controlled by the government’s every move.
It is always a pleasure to hear what Dr. Ron Paul has to say in regards to the issues of the day. His understanding and comprehension of the system is so widespread and his foundation for arguments is virtually impeccable. His position for everything that he votes for is to attack the disease and not the symptom. How could we solve our issue of debt and spending with more debt and more spending? This was his thinking and rational for voting against raising the debt ceiling.
Even at gold’s “bubble” price, countries such as Korea and Thailand have added more than 10 billion in gold this year as a sign that fiat currencies can’t be trusted and the inevitable is happening. There is no way that people can honestly think that the fiat money system is going to sustain the mess that the country is in for much longer, and as a result people will continue to put their wealth into other avenues and other assets that will retain purchasing power.
Warren Buffett stated a quote that said, “Nobody ever got rich betting against America.” Essentially purchasing gold and silver you are betting against the future of the dollar and the success of the United States economy.
It’s obvious that the government will continue to inflate their way out of debt. Already there have been huge gains in the commodity markets and many individuals who have been investing in gold and silver have seen huge gains over the long-term. This week, we saw gold reach record high levels–something mainstream economists said would never happen. Because the government understands that people are betting against the Federal Reserve and the U.S. dollar when doing this, it wouldn’t be a surprise to us if we see some major taxes and punishment for realized gains on precious metals. This would not only be a way for the government to stick it to its people, but raise more in taxes which we believe will be increasing in the near future. The other kicker with taxing the gains on commodities is that much of the increases won’t be true purchasing power increases, but rather devaluation in the dollar. We don’t believe gains on gold and silver should be taxed because it’s a lose lose for the investor with no quantifiable increase in real value. It’s abuse by the government to continue to punish the success of individuals by taxing and taking from those who work hard and save. There has been enough bailing out and covering up of past mistakes that should not continue in the favor of the ones who are responsible.
Stay in the news and understand the atrocities that we are being governed by. Peaceful anarchy and rebellion against the leadership is healthy every now and then to keep government in check and under control.
“Man must not check reason by tradition, but contrawise, must check tradition by reason.” –Leo Tolstoy
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