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Gold and silver rose again yesterday (1.2% and 2.3% respectively) as the dollar continues to come under pressure.
The dollar has fallen not due to an increase in risk appetite but rather an increase in risk aversion coming from the dawning realisation that the very credit worthiness of the US is at risk due to the global financial and economic crisis.
The former US Comptroller General, David Walker, warned in an op-ed article in the Financial Times that “America’s Triple A Rating is at Risk”. This is because the US has an accumulated negative net worth of US$11 trillion, additional off-balance sheet obligations of US$45 trillion and a current year budget deficit forecast at US$1.8 trillion (a massive nearly 13% of GDP).
These daunting fundamentals mean that America is at risk of losing its AAA credit rating for the first time since 1917. This would have huge implications for the international financial and monetary system as it would likely lead to the dollar’s dominance as the global reserve currency being diminished and consequently gold’s role being greatly enhanced.
The Chinese government and, overnight, the Japanese opposition have voiced their concerns regarding their dollar assets (Chief Finance spokesman of the Democratic Party of Japan, Masaharu Nakagawa, told the BBC he was worried about the future value of the dollar and if elected, Japan would not buy US dollar denominated bonds).
The deteriorating financial condition of Uncle Sam is a long term fiscal and economic challenge that should result in gold remaining in a bull market for the foreseeable future. Indeed, it means that the inflation adjusted high of $2,400/oz reached in 1980 (when the US fiscal situation was positively benign compared to today) is a more than plausible target in the coming years.
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There are lots of things in the world to buy other than dollars:
Gold, silver,platinum, palladium, nickle, copper, zinc, tellurium, corn, wheat, soybeans, concrete, tanks, farms, you name it.
I meant to say US debt.
On May 13 08:33 AM yellowhoard wrote:
> Evertime I hear economists say that the Asians have no choice but
> to buy dollars, I wonder what the hell they're smoking.
>
> There are lots of things in the world to buy other than dollars:
>
>
> Gold, silver,platinum, palladium, nickle, copper, zinc, tellurium,
> corn, wheat, soybeans, concrete, tanks, farms, you name it.
Says so right on top "FEDERAL RESERVE NOTE" In all caps like they are proud of it or something.
Your first post was just fine.
I've been putting "for the last time" in a lot of my posts on sites recently. Here're some:
- start calling yourself an Austrian and then study at mises.org
- plan for massive inflation and "currency wars"
- the dollar will fail (for some definition of "fail")
- hold physical gold/silver and also have an offshore gold/silver account that you can call and convert to a foreign currency
- seriously consider leaving the US if you are a capitalist
Our creditors are not. China wants a new reserve currency. OPEC countries have stopped pegging to the USD (now they peg to a basket).
MBAs on Wall Street mindlessly follow the academic teachings they learned in school -- the models that have since been disproven and the absurd notion that US Treasury debt is "risk free". After taxes and inflation, even the long bond is priced at negative real rates.
Our spending continues to grow much faster than our revenue. There is no tax rate that can fix this problem -- only lower spending. Unless the US accepts this mathematical truism, the USD will soon go the way of every other banana republic currency.
BTW -- back in the 1930s, FDR seized privately owned gold. Unless you keep your gold overseas, not sure gold is as safe as some people think
the best i found were brazil and ecquador. anything better? i considered expatriating but decided that i just couldn't give up on the u.s.. i opted for trying to acquire a small vacation home as a refuge/investment/recr... if you have recomendations please give them. perhaps it is foolish to stay but i've always been to dumb to know when i was beat.
i started seeing a real problem about 1992 and started acquiring metals and taking other steps. i am still amazed that it all held together. the center is extremely weak to steal from eliot.
I too have been looking to get out of the US and move to a free country with low taxes. A few possibilites are Panama, Andorra, Norfolk Islands, and St. Kitts and Nevis. The hard part is getting citizenship in these countries. But St. Kitts and Nevis offers economic citizenship where you pay them $150,000 and you get citizenship and a passport that is accepted by all Commenwealth countries (you do not have to live there). As a citizen of St. Kitts and Nevis you do not have to pay any taxes at all. No income taxes, sales taxes, captial gain taxes, etc. True freedom!!!
Regarding places to live check out Norfolk Islands near Australia. No taxes there either. Great beaches and nice people (all 3500 of them). My long-term plan is to become a citizen of St. Kitts and Nevis and a permanent resident of the Norfolk Islands. That way I still can travel around the world and still have citizenship once I get rid of the endless tyranny of Uncle Sam.
thank you. great info..
i will look it over. some days i think why keep up the struggle. it appears the majority prefer the safety and security they think socialism will provide. the republic seems all but replaced by the "modern" socialist democracy. i guess i am a dinosaur since i choose personal liberty, self determination, and self responsibility. still it is hard for me to give up on the u.s.. my pretty half tells me i'm to stubborn, to competitive, and to stupid to know when i'm beat. she is ready to go last year.
to me the sticking point is the principle of letting the country that is the beacon on the hill spiral down. i know history says it is time.
i have been looking at panama some as i have some involvment with a company based there.
good luck with that course. my camel's back is most definitely straining. i hate to see one more freedom minded person leave but i cannot blame anyone. norfolk islands sounds like paradise.
I spent 2 years reviewing articles and had pretty much made up my mind that I would check out Panama. But I first took a vacation to Costa Rica, and the rest is history. Have lived here or in South. Nicaragua for the past 4 years or so and love it. There are many options in Latin American coutries if you desire residency, Or just be at PT and check out some new local every 3 months for 72 hours minimum.
Most countries down here do not have income taxes, do not recognize capital gains etc. But as long as you hold US citizenship, you still have to pay Uncle Sam. That you are stuck with for your life...
Live as Uncle Harry said: Have citizenship in one country, bank in another, and live in another". Works for me. Pura Vida!