Golden Reality Check

Wake up!!!  More debt is not going to solve the debt crisis, buy gold coins while you can.  The global financial crisis is worsening and now is the time to buy gold coins and gold bullion while the prices are low.

Twenty four hours go by and all of a sudden it doesn’t look like everything is  OK in “Pollyanna’s” world.   The markets appear to be bracing for Alcoa’s earning report which is to be released after the market close today.  Analysts  are predicting  Alcoa to post a loss of approximately 50 cents a share with total revenue of $4.68 billion.   This is just the first report in this earnings season and before it’s even out, things are going south.   The DOW is down 124 at 7851, the NAS down 21 at 1585, the dollar, that wonderful safe haven store of value, is up .48 (.63%) at 85.20 and gold is attempting to hold on to $880, up $12.40 at $881.10.

Let’s get real and look at the line of B. S. that we have been handed!

1.  The people who created the problem, or at best allowed it to develop under their  watch, should be in charge of  fixing the problem?  Not working!

2.  Creating more debt will solve the problem of the massive debt situation that the  U.S. finds itself buried under?  Not working!

3.  Once the massive increase in liquidity brought to you by the geniuses in
charge  of fixing  the problem, aka quantitative easing, fixes the problem, it will
be removed quickly so as not to create inflation?  Not going to work and never
has worked in the past!

There simply is no existing mechanism to do this, nor is one likely to be one invented when it is needed. We are talking between $12 and $13 trillion dollars in the U.S. alone.  Are the banks that borrowed it going to give it back?  Not likely!  How about whoever they loaned it to around the world?   Not unless the global economy does a 180 and they are sporting 20% to 25% profits which does not appear to be on the horizon anytime soon.  All the Fed can do is tighten and put restrictions on new money coming into the system.  They have no method of taking money out of the system.

Now add to the $13 trillion the U.S. has printed another approximately $7 trillion for the global community and you are looking at $20 trillion  that has to be removed from the global monetary system.  We have traded one financial crisis for another and the delay in dealing with the first one will cause the second one to be exponentially more severe!

I don’t want to sound like a “Gloomy Gus”, but if the world’s politicians are admitting these numbers, you must fall back on,  Rule #1  “If their lips are moving, they must be lying.” These numbers will go way higher as the financial crisis goes forward.

Where Do We Go From Here?

This situation presents us with a lot of questions.  Will the U.S. ever pay off this mountain of debt that the government has created?  Not a chance.  I think the plan has been to monetize the debt away from the get go.

What will China do with all the paper that they have acquired from the U.S.?   They stand to lose a ton when the dollar rolls over.   If I were in their shoes, I would be selling all the dollars that they could, without raising an alarm in the markets, while the dollar was artificially high like it is now.

How about Russia?  As I  have written about in earlier articles on BuyGoldco.com, Russia has called for a new world reserve currency to replace the dollar.   Arkady Dvorkevich, the Kremlin’s chief economic adviser, is in favor of including gold bullion in a basket weighted world currency.  The Chinese like the idea as well.  These are two big global players calling for gold to be in the mix for the new reserve currency.  When two major players line up on the side of a new reserve currency with gold backing to replace the dollar, can the lap dog U.N. be far behind?  Apparently not.   A United Nations panel of  “expert” economists  are set to recommend replacing the US dollar with a more stable and less volatile currency system and, not to be outdone, the International Monetary Fund  plans to pursue the discussion of a new reserve currency in the coming months.

The dollar is a “dead man walking” and the current administration is doing everything that it possibly can to move up the date of the execution. What more do you need to see in order to realize that the dollar’s days are numbered?  As the U.S. keeps printing trillions of dollars to throw at the financial crisis there will soon come a time when foreign nations will quit buying our debt and the dollar will implode.   Gold and silver will be the only true store of value left.

While governments (the non producers) say that everything is under control,  gold coin purchases have skyrocketed in Russia, China and around the world.  The U.S. Mint says sales of its one-ounce American Eagle gold bullion coin were up over 400% to 710,000 ounces in 2008.  Ninety percent of analysts estimates are for gold and silver bullion sales to be greater in 2009 than 2008.  Look at the numbers and start buying gold and silver coins and bullion on any pullbacks in price.  Time is running out because the financial ponzi scheme the government is running will not go on forever.

Meanwhile Back In The Dark Recesses of The IMF

I did not forget the IMF’s desire to sell 400 plus tons of gold in order for them to have the cash to enslave more governments.   First it will have to be approved, which I am sure it will, and then the timetable of the selling will probably be played out over 2 or more years,  which will lessen it’s impact on the price of gold.   Most of it will be bought by central banks, and ETF funds, which will also minimize it’s effect on the price per ounce.  Finally, the explosion in private purchases of  gold coins and bullion will serve to offset the  IMF sale.  In the big picture it should have a minimal effect and at worst, provide another opportunity to buy gold coins and bullion at reduced prices.  Protect yourself while you can by buying gold coins and bullion!

Till next time, good luck and good trading!

More Gold Market Analysis:

• A Golden Oportunity
• IMF Diversion Will Not Stop Gold Buying
• Buy Gold Coins, Bullion to Hedge Dollar Drop
• Where Is Gold Going?
• Golden Bubble?