Investors today are struggling to find shelter in a market where everything seems to be on the rise, but that is to be found only in certified gold investment.
Posted by Adam King on April 08, 2011
Certified gold is the one reliable store of value.
April 08, 2011 – Investors today are struggling to find shelter in a market where everything seems to be on the rise, but that is to be found only in certified gold investment.
There is only one way to explain consistently rising prices across the board – the value of the currency by which they are priced is declining faster than any of the assets. When the dust settles gold bullion will be the only asset class left standing.
It is ironic that the strongest warning signs of the trouble we are in come from the Fed’s own database. For example, records on borrowing the Fed has kept since 1976 doesn’t take a whole lot of analysis to reach a very worrisome conclusion.
The records detail borrowing by the private sector and public sectors. Household credit is a strong contributor to consumption and business credit is mostly for capital expansion to meet the increased demand. Public debt in a healthy economy should be a short term reflection of business credit – a limited and temporary shot in the arm to spur capital investment.
That’s pretty much how it went up to this century. Only in the period from 1991 to 1993 did public borrowing exceed 50% of total credit expansion, peaking at 78% in 1991 when it reversed as business picked up. Throughout that time household credit remained relatively constant. By 1999, however, public debt was contracting but household debt was expanding at an alarming rate.
Over the next several years household and public credit expansion cooled while business investments were rising. Things were looking good until 2006, and in 2007 all hell broke loose. By 2009 both household and business credit had contracted by a considerable margin and government started borrowing in an ill-conceived attempt to not only boost capital investment but to compensate for lost demand as well. Since that time every dime of new credit has gone to the government.
The bottom line? A stalled economy holding the bag of burgeoning debt and equities with no supporting value. With no growth to repay debt it’s only a matter of time before the debt spiral wipes out all purchasing power in paper assets. And certified gold investments once again will prove their status as the one true store of value.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
Categories:
US Gold Market
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