It is encouraging to see the gold market getting back on track to its long-term trends.
Posted by Adam King on May 02, 2011
The Weiss Sovereign Debt Ratings put the gold market into perspective.
May 02, 2011 – It is encouraging to see the gold market getting back on track to its long-term trends. It is a sign that at least globally folks are waking up to the true state of the US economy and a glimmer of hope that our politicians might wake up before it’s too late. Just don’t hold your breath.
Martin D. Weiss of Weiss Ratings has stepped in where S&P, Moody, and Fitch have feared to tread with the introduction of The Weiss Sovereign Debt Ratings. Weiss believes “an honest rating for U.S. government debt is urgently needed to help protect investors and support the collective sacrifices the U.S. must make in order to restore its finances.”
By that scale the US earned only a C, indicating “that the current fiscal condition of the United States government is far inferior to that implied by its AAA/Aaa rating from other agencies.” Our government “ranks 44th in terms of its debt burden … 32nd for international stability, due mostly to low reserves; and 27th for economic health.” For comparison, Mexico beat us out with a C+ and Russia with a B.
Weiss gives these examples of the damage done by the leading services’ artificially high ratings:
1) It conceals the real level of risk in US sovereign debt while keeping yields “far too low to compensate for the risks.”
2) Everyone relying on interest income or dependent on treasury-keyed fixed incomes “are being severely underpaid, virtually across the board.”
3) Downgrading the outlook while maintaining the AAA rating sends a double message and is “entirely inadequate to warn or protect [investors].”
4) Our rating “is unfair to other sovereign nations that receive inferior ratings despite superior fiscal circumstances.”
5) The “debt rating has helped foster political resistance and gridlock in Washington,” whereas an early down grade might have helped “lawmakers and policymakers take earlier remedial steps.”
6) Maintaining the AAA rating has created “an environment of chronic public complacency.”
As more and more services emerge to inform us of the true nature of our economy, the disillusionment with our government will gradually spread. Eventually we will even get back on our feet and can begin the climb back to power.
But the destruction of all paper wealth almost certainly will come first, devastating everyone without the protection of investments in certified gold.
Senior Staff Writer – Certified Gold Exchange
US Gold Market