By Jim Clark
Many people are worried about the U.S. economy and our massive debt and its effect on their future. U.S. monetary policy is a matter of concern, and our government leaders have not shown themselves to be responsible when it comes to handling their fiscal responsibilities. In fact, they have shown themselves to be just the opposite, as shown by the the projection that U.S. debt will increase from its current $18 trillion to $28 trillion by 2018. This means continued devaluation of the dollar and your investments. There are another $115 trillion in unfunded liabilities in government programs such as Social Security and Medicare. Remember, government never produces anything. Government can only consume and redistribute the wealth produced by its citizens. Government cannot create real jobs or economic growth, it can only absorb from the productive part of society. Like the plant from the play “Little Shop of Horrors” that grows and thrives on blood, government must look for more and more sources of revenue to feed its insatiable appetite. The consequences of money printing, artificially low interest rates, asset bubbles and debt has real consequences for savers and investors. Over the last several years the U.S. government and the Fed pumped trillions of dollars of American’s money into the banks and stock market. The banks, who received all the freshly printed money that comes from the Fed’s printing press, pay interest rates so low that anyone in a saving or money market account is slowly having their wealth slip away. I believe strongly that now is the time to protect and hedge your hard earned wealth from another major financial crisis with precious metals. There are many signs that point to the same patterns that led up the financial collapse of 2008. Let’s look at some of them.
What we have witnessed is a base being put in for gold. If you’ve been waiting to participate in the metals market, wait no longer, now is the time.
First of all, a bad start to the year for the stock market with the S&P 500 down 2.73 percent in the first three trading days of 2015, one of only three times in history for such a decline on the first three days of the year, the last one being 2008. This, along with very choppy financial market behavior in the stock market, with big ups and downs, is often a sign of big trouble ahead. Other indicators are a substantial decline for 10 year bond yields, and the beginnings of a junk bond collapse. The price of oil has crashed leading to a dramatic drop in the number of oil and gas rigs in operation. The last time we saw a crash in oil like this? 2008. A broad range of industrial commodities have begun to decline, reflecting a slowdown in the global economy. There is also a crisis in investor confidence as reported by the Yale School of Management’s Crash Confidence Index. That also happened just prior to the last financial crisis. (http://www.zerohedge.com/news/2015-01-07/10-key-events-preceded-last-financial-crisis-are-happening-again) And Bill Gross from Janus Capital Group, considered by many to be the number one authority on government bonds on the entire planet, made this statement, “When the year is done, there will be minus signs in front of returns for many asset classes. The good times are over.”
So how can gold safeguard your savings and wealth? Well, gold is real money that stands outside of the banking system and is thus fool proof insurance against a banking system collapse, creating a huge element of safety over stocks, bonds, or ETF’s, as far as counter-party risk goes. And as the debt has more than tripled in the last decade, so has gold. Gold buys as much today as it did 2, 5, 10 and 20 years ago, while the dollar buys far less. Gold is a safe investment that has survived government and financial collapse for 6,000 years. Gold is real currency. Did you know that the major exchanges allow physical gold to be used as collateral for leverage accounts? And, you can have possession of your investment, keeping you in control. Gold and silver is selling in record numbers all around the globe.
For those of you who watch technical signals, the chart below shows the RSI (Relative Strength Index) and the MACD (Moving Average Convergence Divergence). The RSI shows a long term support trend line, and the MASD signals increasing momentum.
And here is another significant technical chart from the stock market showing strong support for gold. As shown in the chart, the U.S. Dollar has gone up 1200 basis points in just under six months. It had been around 80.00 on the index for a long time. As the Dollar started gaining strength, crude oil started a slow decline in price. Three of the currencies that make up the Dollar Index, the Euro, British Pound, and the Japanese Yen, have been on the decline, losing more and more value in the six month time frame, resulting in the rise we have seen in the dollar. As of the close of trading Friday, the dollar has gone up 15.2% in six months. However, the Spot Gold index when the Dollar was last at 80.00 was $1292 and as of the close Friday, it has only fallen 5.3%. This is actually remarkable support we are seeing for gold. What we have witnessed is a base being put in for gold. If you’ve been waiting to participate in the metals market, wait no longer, now is the time. When the U.S. dollar trade unwinds, the stored up energy in the metals market will be unleased, and once again we will be off to the races.
Given the current financial environment, it makes sense to own some real physical gold. Now is the time to buy low. And why not consider owning a gold IRA? Gold-backed IRAs have risen by an average of 15 percent per year for the last 12 years in a row. As I discussed last week, the government is looking at ways to access America’s retirement wealth. Call one of our precious metals experts today to find out how to protect your retirement savings.
I’ll be keeping a sharp eye on the market and I encourage you to do the same.