Brien Lundin, the editor of Gold Newsletter, President and CEO of Jefferson Financial, said recently at the New Orleans Investment Conference, which he is responsible for, that over the period of an eight-year term by a President, the Federal debt doubles.
Assuming that's how it plays out this time around, it means the current $20 trillion in debt will soar to $40 trillion in about seven years.
The reality is raising taxes and cutting government spending has no chance of dealing with these growing liabilities.
In the end, it means a significant depreciation of the U.S. dollar, which also means precious metals in general, and gold in particular, are guaranteed to increase, according to Lundin.
Gold once again pushed past the $1,300 per ounce mark this week, surprising most of the market. Silver followed suit, closing in on the $17.50 level.
It's amazing at times to see how quickly investors forget lessons in safety, and blindly believe the mainstream narrative on the state of the economy and stock market.
For that reason, along with the Fed's manipulation using its lack of commitment and visibility concerning interest rates, it is keeping investors paralyzed in regard to moving more of their capital to gold. Since they don't know what the Fed is going to do, they're seeking safety in cash or Treasuries instead.
With the world now plunging toward global recession, it's amazing the disconnect many investors have between the world and America, as if what happens everywhere else won't have an impact on the American economy.
It's going to take a harder landing to reveal the real weakness of the U.S. economy, and it will definitely come in the not-too-distant future. Smoke and mirrors can only do so much before it comes falling down.
At that time gold will be the go to place of safety, and it once again will soar in price.
Sometimes it does get old when mainstream media cheerleaders gush over any news it deems irrefutable and positive about the economy. The latest data suggest an "unexpected" solid performance in the last quarter, which suggested to many the recovery remains on track.
Of course much of the response came about because of the plunge in the stock market, temporarily disrupting the media narrative, which now can be resumed as if everything is okay.
What I want to talk about most is the government spending number, which was up about 2 percent. To me, that's almost the entire story of the surprising growth numbers.
Sure, corporate and consumer spending improve, and that appears to be legitimate. But when you include a 2 percent increase in government spending, that disproportionately pushing up the numbers because of the size of the budget, which if they were removed from the data, would have resulted in an unimpressive performance.
As for the corporate expenditures, my belief is a lot of that was because of the depressed commodity prices, which companies took advantage of. China did so as well, spending over 20 percent year-over-year on over 20 commodities. With reports suggesting this isn't sustainable, I think some figured this out, and attempted to lower future expectations.
Gold is still positioned well in this economic environment, and I believe the fake economic recovery will be exposed in the near future, as it already is in many other parts of the world, and gold will start to climb.
The more I watch what has happened with the price of gold recently, which while having some strength, hasn't jumped in the way it should have under these market and economic conditions.
It's obvious investors have been holding back on plowing into gold for safety because of the manipulative comments from the Fed that is may or may not be raising interest rates in the near future.
The lack of clarity, which now has to be considered a planned move, is what has been holding the price of gold down because investors don't know whether or not there is a rate increase coming soon.
This pushes capital into bonds, which is what the government and the Fed prefer. That may last for a little while, but once the Fed makes it clear what its next move is, there will no longer be any doubt. Almost certainly the next move will be to do nothing.
Once that happens, there will be an accompanying comment that will once again darken visibility in attempts to keep money from being placed in gold.
The reason why the Fed hates that is it contradicts its cheerleaders, and brings back the narrative of the consequences throwing fiat money into the financial system has.
My belief is the Fed won't be taking any steps in regard to interest rates, as the global markets aren't through getting hammered, and with China, Japan and Asia in general struggling, along with Canada and Australia, there is little in the way of positive catalysts to signify ongoing growth.
The slow growth projections of the U.S. economy confirm this.
With a lot of cash on the sidelines as well, I believe it's getting ready to be invested in gold once the central bank signals where it's taking interest rates.
By making investors wait, it's further generating pent-up demand, which when released, may even be stronger than believed at this time.
If it goes the other way and interest rates are increased, I see that as a temporary pause. The global economy is grinding to a halt, and there is no way the U.S. economy can maintain the slow growth way it's now enduring, with consumer spending.
One way or the other gold prices are going to rise, and I don't think it's going to be a long time into the future, whether the Fed raises interest rates or not.
With economies around the world slowing down, currencies plummeting, and the commodity sector beaten down, there is more to the stock market correction, then, well, being a correction. That's good news for those that have been waiting for gold prices to gain some momentum.
There of course is also the tough decision ahead for the Federal Reserve, which until recently, was almost sure to raise interest rates. That's more than in question at this time, as global markets take a big hit.
Even if the Fed decides to boost interest rates, gold is still looking good, as there are just too many negative catalysts out there to make that the determining factor in the price of gold.
Not only that, but there is a growing number of people that believe not only won't the Fed raise interest rates, but the global and domestic U.S. economy may be far worse than it is, which points to the possibility of another round of quantitative easing. And we all know how gold prices would jump in case of that event. If the Fed decides to hold off for now, that is also positive for gold. So whatever way you look at it, gold prices will start to rise, and will continue to do so over the next year at least; possibly further out as well.
Safety is going to be a dominating part of the investment landscape, and gold will be one of the leading assets investors seek to protect their capital.
Institutional investors, including hedge funds, have reversed their aversion to gold, as they are now betting on the precious metal to move up again, according to the Commodity Futures Trading Commission.
On August 18 they surpassed gold futures and options contracts betting against gold by 18,454, said the CFTC. A week before bears had 2,794 futures and options contracts than gold bulls.
Much of this came from the stock market crash in China, and was heightened further by Chinese exports plunging by 8 percent, pointing toward the country probably being in the early stages of a recession. It also generated questions as to how healthy China's economy has really been, and whether or not the data reported was even less accurate than had been believed.
Japan has also been struggling, along with the rest of Asia. Countries more heavily reliant on natural resources, such as Canada and Australia have also been suffering a reversal in fortunes, as commodity demand has been falling.
All of this is happening in the midst of a currency war, as many nations with significant export markets fight to weaken their currencies in order to boost exports.
Recent numbers from media also show that sector is under strain, with ESPN losing a moderate number of subscribers.
Taken together this has increased the probability the Fed will hold off on raising interest rates. That's likely to play out that way, and if things get worse, we may not even see a bump up in the interest rates.
Combined with a strong U.S. dollar, which is starting to put pressure on U.S. exports, as data from the New York Fed recently stated that region of the country failed to meet expectations, it would be very surprising to see a change in interest rates by the Fed.
Things are falling apart so quickly, it's hard to see how gold prices can be suppressed going forward. Instead of an interest rate hike, we may be seeing talks of another round of quantitative easing instead.
The propaganda has turned openly laughable. On the popular major financial news networks, the recent decline in the so-called Gold price has prompted quite the parade of clowns on the ship of fools to trumpet nonsense.
The widely published and posted Gold price is dominated by futures contracts, and thus as corrupted as meaningless. The entire global financial structure is crumbling before our eyes.
The gang of central bankers has applied their monetary policy for four and a half years since the implosion of Lehman, Fannie Mae, and AIG. The first is dead, while the second has transformed into a sanctioned subprime lender again, and the latter is a sinkhole.
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The little games being played by the Federal Reserve in having comments alleging it may quit printing before it reaches its unemployment goal, is a hoax of course, as since the latest round of endless stimulus, nothing at all has improved in that regard, making it not only unlikely to happen, but points towards the Fed trying to manipulate the markets because it knows the response it would have to the minutes from the meeting they fed us.
With that in mind, it's possible in regard to the price movement of gold, that the usual move it has made over the last several years may not happen as quickly this year. Normally the weakest gold has been from 2010 through 2012 has been during the months of February to April, which by that time it has started to gather strength.
That could definitely happen again this year, but there has been so much money thrown into the economy, that it could result in it taking a little longer to transpire in 2013.
So while there are some that are pushing investors to put their money in industrial metals, it could pose some danger over the long haul, but could be a good move in the short term.
The problem is the sentiment could quickly turn over the next several months, and to get caught when it turns negative could cause some painful downturns. At this time we're already seeing some cracks in the economic dam after the robust beginning of the year, and it appears there is nothing that will change that any time soon.
No matter what the Fed says, there is no way in this weak economic climate it's going to stop making funny money.
What the minutes of the Fed probably are meant to do is try to shore up the dollar while helping consumers by trying to push down prices. The effect won't last for long.
The bottom line is gold prices could jump as they have over the last several years sometime in the next month or so, or it may be on pause for a little longer. Either way, the price of gold will go higher, as all the fundamentals remain in place for it to do so.
For better or worse, what comes out of the mouth of European Central Bank (ECB) President Mario Draghi can move the markets, and that's the case Thursday with gold, the euro, and the U.S. dollar.
The euro zone has foolishly been kept in the back of minds of many investors, as the mainstream media has been extremely lax in its understanding and reporting on the condition of the region. Much of that is based upon the desire for social engineering by radicals and the Obama Administration, which is trying hard to take the focus off the dangerously weak global economy and on many irrelevant side issues, which are starting to look circus-like in nature in comparison to the challenges we economically face.
What drove most of the response from the market were the comments that there are more negative risks in Europe than there are positive ones. That resulted in the euro plummeting almost 1 percent against the U.S. dollar.
Even though Draghi said he thinks economic activity will be stronger in the latter part of 2013, that largely fell on deaf ears because it's far less likely because of the negative risks he sees.
Another comment from a different source, this time Federal Reserve official Jeremy Stein, concerning the fact that low interest rates could produce risks to financial stability, also weighed on gold and silver.
Gold futures for April delivery settled at $1,671.30 an ounce, dropping $7.50 an ounce.
Senior economist at Longview Economics, Harry Colvin, said gold will rally from $300 to $400 an ounce in 2013 whether inflation comes or not.
Colvin said this in an interview on CNBC:
Everyone is always bearish at the lows, that's the time to buy it, we're going to get a good rally this year I think.
We don't need inflation for a gold price rally. We haven't had inflationary pressures in recent years. The only inflationary pressures we have is from QE pushing commodity prices up.
Gold's gone sideways for sixteen months, that's because the balance sheet in the Fed has gone sideways for the last sixteen months. The balance sheet is about to expand rapidly. And with that we're going to get a rally in the gold price, it's going to go hard this year and probably into the next.
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Now that Barack Obama has been re-elected President of the United States, billionaire commodity expert and investor Jim Rogers sees his disastrous economic policies as not only continuing, but making things much worse for Americans and the world in general.
More deficit spending means more economic problems for the United States asserts Rogers, who also says the global markets have probably already discounted the eventuality of a fiscal crisis in America.
Rogers has consistently stated that in 2013 and 2014 it's going to be very rough years for the United States economically.
"America is going to have a slowdown in 2013-14, there will be fewer jobs, more unemployment and turmoil in oil and currency markets," Rogers said.
Even so, Rogers says there is little doubt the so-called fiscal cliff in the country will get a quick fix by politicians, but in the end it'll make things even worse.
When queried about a possible downgrade of the economy of the United States, Rogers said it should have already been done in the minds of investors. "If you haven't downgraded America in your mind, you may do so," he concluded.
He sees no change in the practices of the Federal Reserve either, where he expects printing money out of thin air to continue as it has been.
Rogers sees hard assets as the place to be over the next ten years, with gold prices expected to continue to soar.
Along with his recommendation that investors get into agriculture, he also suggests metals as another strong place to put your money.
He has put his money where is mouth is, recently buying up agricultural land in Australia.
Joseph M. Foster, who is the lead investment team member for its flagship fund, Van Eck International Investors Gold Fund, said in an interview with The Gold Report that he sees gold prices and gold mining companies, especially midtiers and junior stocks, as ready to soar.
Citing the implementation of QE3 as a catalyst for gold, whereby the price of gold has jumped about 6 percent since August 2012, and the fund he is lead investor on up close to 20 percent since August, he sees that as continuing to be the performance of the asset class and mining companies serving it.
When asked if he sees this performance continuing, Foster said this:
Yes, for a couple of reasons. First, the boards of the large gold companies that have been missing expectations have woken up to the fact that management changes are needed. Some very high profile CEOs and COOs have departed. There has been a shift in focus toward more profitability and less growth. That shift toward profitability, shareholder returns and returns on capital should bode well for the industry.
Second, costs could be coming more under control in the months to come. The slowdown in the global economy caused a slowdown in mining activity across base metals, coal companies and iron ore companies. More labor is now available. Lead times for equipment and materials are shorter. That should translate into less cost pressure as we move through 2013. That could be another catalyst for the industry.
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