Gold and Silver have both traded sideways over the last 30-45 days giving you more time to make acquisitions at levels that we consider oversold and undervalued. Although the recent trend has been sideways, we did see a big run up in both metals on Tuesday, March 2nd.
This new run, could push Gold and Silver much higher - many are speculating that Gold will trade in excess of $1350/oz in 2010. Others are calling for severe shortages in the Gold and Silver markets. These shortages are never good, in the height of the financial crisis in 2008, wholesale bids on bullion products like the Silver Eagles were trading for almost 30% over the spot price, and after paying more than 30% over spot, clients had to wait up to 6 weeks to receive their shipment, not a good scenario.
Consider the articles "Brace Yourself for the Coming Gold Shortage" and "Gold to Hit $1350-$1400 by Late Spring".
Debt - The Word of the Month
The current scenario financially, on a worldwide basis, is one of despair. In 2008 we were awestruck at the complete failure of Lehman Brothers et al, in 2010 and onward, we believe that instead of business giants going bust, it will be entire Countries and States that go under. If you think the issues of Lehman and Bear Sterns were bad, wait until the repercussions are felt when entire Countries go bust.
If the word of the month over the last three months has been hyperinflation, the new word of the month that is on the tips of most financial pundits tongues is Sovereign Debt. It is interesting that this is the case since burdensome Sovereign Debt loads are the problem that normally ends in hyperinflation, not the other way around. So in reality, the Sovereign Debt issue that is on everyone's minds, especially pertaining to the financial fiasco in Greece, should have been the first conversation piece, not hyperinflation. Since unsustainable debt is a precursor to hyperinflation, it should be terribly concerning to our readers that the only thing the mainstream media and pundits seem to be talking about these days, is, you guessed it, unsustainable debt. By omission, these mainstream pundits, are telling you that inflation is on the way and to buy all the Gold and Silver that you can, while you can.
The Global Debt Bomb
Over the last 30 days, many of us have heard about the debt crisis in Greece, but how many of us have considered a "Global Debt Bomb"? Forbes Magazine has considered it, and in fact, recently ran a cover story with the same title. In the article, the author points out that these unsustainable debt levels are not limited to just Greece. In fact, in this year alone, Governments around the world will issue an estimated 4.5 TRILLION in debt, an amount that is three times the five year average for industrial countries. Of that 4.5 Trillion, the United States accounts for a whopping 45% of total debt worldwide. According to estimates, the amount of debt issued by Global Governments in 2010 would be enough to buy every ounce of Gold ever mined in the history of the world, all in a single year!
This mammoth accumulation of debt is unprecedented, and there will be consequences. Many are claiming that the debt crisis in Greece will spread to the doorstep of America sooner rather than later. In an article published in one of the most prestigious financial newspapers on the planet, the Financial Times, entitled "A Greek Crisis Headed to America" the author gives the following warning:
"For the world's biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the EuroZone, the more the US dollar rallies as nervous investors park their cash in the "safe haven" of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008. Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase "safe haven". US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941."
Here in the United States of Debt, according to the Congressional Budget Office, the Gross Federal Debt will equal 100% of GDP in just two years time. Not only that, the CBO also stated that the United States will NEVER have another balanced budget. You read that right - NEVER.
The Dam is Breaking
While the Greek Crisis seems to be the epicenter of our most recent financial Earthquake, its aftershocks are being felt around the world. A Major French Bank, Societe Generale, has recently put out a report stating that the collapse of the Euro is inevitable, especially if the EuroZone bails out Greece. You see, in the past, before the ideas of Free Trade Agreements and Globalism were implemented, the natural firewall to crisis like this one were national borders and boundaries. Today, all it takes is one crack in the dam to bring down the whole world economy.
It would be intellectually dishonest to believe that the debt crisis is isolated to the EuroZone and Greece. America has problems of its own that aren't much different from those seen in Greece. This realization has led many to believe that the United States could be in the beginning stages of losing its precious AAA rating on its bonds. It has also led to major banks in the United States, like Bank of America, to issue warnings reported in Bloomberg with the title "Junk Debt 'Wall' to Trigger U.S. Defaults" in it Bank of America issues the following ominous statement:
"A 'wall' of junk debt maturing in the next four years will increase the risk of corporate defaults in the U.S., according to Bank of America Merrill Lynch. Almost 90 percent of loans outstanding mature in the next five years, compared with an average of 36 percent between 2005 and 2009, according to the report."
Statements like those from Bank of America were also echoed more recently by the President of the Kansas City Fed, Thomas Hoenig, who warned that unless the U.S. take difficult steps to reduce spending and increase revenue, (think more taxation) the Federal Reserve might be forced to "fund" the "unsustainable" Federal debt. These buzzwords could be a veiled threat that the Federal Reserve, if it hasn't already, will soon be forced to monetize our debt, an action that is highly inflationary and would likely send Gold and Silver soaring.
China Holds the Ace in the Hole
Question. If we at the Austin Report, along with many of our readers I am sure, are astute enough to pick up the warning signs issued by our major banks and Government Agencies, don't you think the Chinese are smart enough to catch on as well? Of course they are. In fact, not only has the Chinese Government caught on, they have also taken decisive action. China sold a record 34 BILLION in United States Debt in the month of December alone. The Chinese people and state controlled press celebrated the move calling it "commendable".
The movement to abstain from buying United States Debt is gaining in popularity as well. A recent push by Military Leaders in the Peoples Liberation Army of China is also occurring. Chinese Generals just released a report stating that the Chinese Government should "attack by oblique means a nd stealthy feints" to make its point in Washington. Adding "we could sanction them using economic means, such as dumping some U.S. government bonds".
Not if, but when Foreigners stop buying United States Debt, when the "wall" of Debt causes the tsunami of defaults that Bank of America warned us about, when the growing movement to stop buying U.S. debt spreads worldwide, our day of reckoning will come. Don't worry though, Barack Obama and those in his administration have a plan in mind for you. A plan that reminds me of the offer made in the movie the Godfather, an offer that can't be refused.
The Government Wants Your 401K and IRA's
Just in the nick of time, the Government has a plan in store for us. Two aides in the Obama Administration just offered up a plan to "encourage" workers to convert their 401K's and IRA's into annuities. The plan is being sold as a way to prepare for retirement that offers a "guaranteed income stream". The supposed reason for this is because of the recent collapse and complete obliteration of most retirement accounts after the stock market plunge that started in 2008. The plan sounds reasonable but when you dig deeper, the more sinister motives are revealed.
According to many researchers, this plan is more than an "encouragement" of converting IRA's and 401K's into annuities, it could and most likely will, morph into a plan that is mandatory. Even worse, according to our research and others, the annuities will be based on..you guessed it, United States Bonds. The problem with this is that as inflation rises, which seems to be certainty, so will interest rates. As interest rates rise, the value of the bonds will plummet, and the so called safe and guaranteed annual income can and will vanish in the blink of an eye.
So if the foreigners won't buy our bonds, someone will be forced to, and that someone is increasingly looking like me and you. Please consider the article linked below entitled "Retiree Annuities May be Promoted By Obama Aides".
A Plan of Action
In Summary, Sovereign Debt is the likely candidate that will lead us into the next financial nightmare. Many are saying that the crisis in Greece will be coming to America. A wall of junk debt is likely to lead to a wave of defaults here in the United States. The Chinese, who have kept our economy afloat for at least the last decade by buying our debt, have not only stopped buying U.S. debt, they are SELLING U.S. debt. These facts and others have led Federal Officials to put out warnings saying that reductions in spending and more taxation is necessary less the Fed be forced to monetize our debt. In response to this, officials in the Obama administration and others basically want to nationalize a portion of your retirement savings, and force you to put them into annuities that will probably be based on our fragile bond market.
The proverbial writing seems to be on the wall. The warning signs are clear and precise. All of these issues and others point to much higher prices in the precious metals arena. I have included a special offer linked to this report. The offer is for the $20 Liberty Gold Coin. If you like big one ounce coins, if you are worried about the possibility of a Gold confiscation, and if you want a coin that adds leverage with a history of outperforming bullion, then look no further than the $20 Liberty produced from 1850-1907. We feel that coins like the $20 Liberty have a strong chance of outperforming bullion. In fact, in 2009 a 5% move in Gold translated into a 35% move in coins similar to the coin being offered above. Please review this offer and get back to me as soon as possible as supplies are limited.
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. This sites content shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author.
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