This article was written in partnership with the precious metals firm "Mayfield’s Bullion & Rare Coin Company". Mayfield's B & C is the firm that correctly predicted the rise in gold prices. Their consultants advise major brokerage firms and mining companies from around the world on the political and economic trends that effect the market price and supply/demand fundamentals of gold, silver, platinum and palladium.
As I am sure you are aware the metals market has gone up and has gone up a great deal compared to prices through-out the 90's, when gold was at an average of around $300.00 to $380.00 per oz. It is currently hovering at approximately $1700 per oz.
The government is incapable of acting in a responsible manner as related to spending and this out of control money grab is weakening the dollar as nothing else could. The country is over 16 trillion dollars in debt and has recently passed a bill to keep that insane trend alive. I cannot express enough, the dire consequences of this irresponsible government spending mentality, how utterly destructive this can be to everything Americans have worked for. I will not be going deeply into all of the fundamental factors that cause a currency to collapse, or why gold and silver are the only real safety net. However I will say this, we are not immune to the collapse of our currency, just like Mexico or more recently Greece. In fact, we are very close to the same point of GDP to debt that Greece was, before their economy tanked.
The U.S. Government is now printing money and pumping it into the economy to increase liquidity. They are hoping this strategy will jump-start the economy with readily available, cheap, money. This has been going for the last few years but the Feds relatively new policy, of not publishing the numbers, is making it harder to track. This increase in supply will reduce the value of existing money and can be the very catalyst to cave-in, what value remains in our currency. The Fed can’t work much magic with interest rates because raising them would adversely effect our own massive debt. None of the politicians in Washington are willing to step up because they are afraid of ruining their political career by actually addressing the real problem. This is largely due to a unashamed titling in the media towards the hard left.
One current and very troubling global trend, is the acquiring of Gold and dumping of U.S. debt by Russia and China, with China being the biggest player in this shell game. The only reason China would be acquiring such large quantities of gold, while at the same time selling U.S. debt, would be an attempt on their part, to insulate themselves from a major U.S. economic decline and or currency collapse. The reason for their concern is obvious, China owns about 8 percent of publicly held U.S. debt. Of all the holders of U.S. debt, China is the third-largest, only behind the Social Security Trust fund's $3 trillion and the Federal Reserve's $2 trillion. This exposes China to significant risk if the U.S. dollar goes south but the assumption that China would try and collapse the US economy out of anger, or completive greed, by dumping their holding in bills, notes and bonds, is misguided, simply because it could negatively effect them as much as it could the U.S. One of the primary reasons China has been such a large buyer of U.S. dept in the first place, is their need to keep the dollar strong. This makes the goods they sell to the U.S. cheaper. The U.S. demand for their exports has been, and still is, a major driving force behind their incredible growth. By dumping U.S. debt and collapsing the dollar, they would essentially, be destroy their 2nd largest customer, with the European Union being their largest. That is beginning to changing however, what we have seen from China over the last decade, but far more so, over the last 4 years, has been an accelerated shift toward other markets. They have reduced their buying and have slowly been attempting to divest themselves of their dependency on U.S. markets. In short, they see the writing on the wall and that does not bode well for the furture outlook of the U.S. economy. The time it will take China to replace the U.S. demand for their products is unknown but it is possable that within 3 to 5 years China could drop an economic bomb on the U.S. and be able to survive it themselves.
Gold is tied to the dollar because gold is bought in terms of dollars worldwide. This makes it the perfect hedge against a declining U.S. economy, especially for those counties exposed to the risk of owning U.S. treasuries. So where does that leave you? Private central banks, faced with monetary uncertainties, such as the negative global impact of a decimated U.S. dollar, are also acquiring gold as protection. They have been quietly acquire gold, mostly through third parties, because they know that printed money is only a promissory note, and isn’t worth the paper it’s printed on, once the issuing country becomes over exposed to monetary mis-management! Central banks are now acquiring vast amounts of gold, and this is a major red flag. These banks do not increase their gold holding unless they are concerned with a major currency collapse or global economic down-turn. It is their actions that have compelled me to write this short article. For professional advice contact: Mayfield's Bullion & Rare Coin Company at www.mayfieldcoin.com
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