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Higher interest rates [are eventually coming and]… will substantially increase the annual interest costs, the deficit, and the required borrowing/printing. More deficits, more borrowing, more printing, and higher interest rates will cause a larger deficit and more borrowing and the cycle will repeat. [You have a choice as to what you do to protect your current and future standard of living and this article sts it all out.] Words: 595
So writes GE Christenson (www.deviantinvestor.com) in edited excerpts from his original article* entitled What Could Go Wrong? And How Gold Will Benefit!.
This article is presented compliments of www.munKNEE.com (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
Christenson goes on to say in further edited excerpts:
The government borrows more money each year to fund its excess spending over revenue. Because the borrowing need is so large, the Federal Reserve “prints” (monetizes the debt) money each month to buy most of the bonds (debt) of the government. If the Fed did not print money to purchase that debt, interest rates would be much higher. Eventually the bond holders will assess the risk of dollar devaluation as larger than the safety and yield from those bonds. The result will be that bond holders will sell bonds (causing interest rates to rise) and/or will demand higher interest rates to compensate for the devaluation risk. Either way, interest rates must eventually rise from their current “all-time” lows.
What is happening to your cost of living?
The money printing (injecting liquidity into the financial system) produces consumer price inflation. The official inflation numbers are benign, but look at the price increases for crude oil, gasoline, soybeans, wheat, corn, gold, and silver in the past decade.
- Consider grocery prices, medical costs, gasoline, and educational expenses and think about your actual cost of living. Has your cost of living increased substantially in the last decade?
- If the money printing accelerates (it must) in the next four years, how much higher will your cost of living be in four years?
- Will salary increases match the increases in cost of living?…[If not,] it will not work out well for most individuals whose income and net worth are NOT in the top 5% of the nation. [Read: U.S.’s Runaway Financial Train is About to Destroy the Status Quo]
What can you do?
- Reduce your living expenses and credit card debt. I understand this is difficult, but it will be easier today than next year. Make a plan and execute the plan.
- Invest disposable income and savings in gold, silver, land, diamonds, or anything that will preserve your purchasing power as the dollar declines in value. You have choices.
- Start now. If your funds are limited, buy a few silver Eagles each month or put whatever you can into a periodic online silver purchase plan.
What can you expect?
- The highest probability scenario is to assume that we will see more of the same – more deficits, more money printing, more inflation, and much higher gold and silver prices. Exponential increases in national debt correlate closely with the exponential price increases in gold and silver. [Read: U.S. On An Unsustainable Path That Guarantees An Eventual Catastrophic Financial Melt-down – Here’s How to Get Prepared]
- The price of silver is approximately $30 per ounce – expect three digit prices in several years. [Read: Silver Projected to Reach $100/ozt. As Soon As Late 2015! Here’s My Rationale]
- Gold is currently below $1,700…My next two targets are $2,660 and $4,300, with higher targets thereafter. [Read: Gold Projected to Reach $4,000/ozt. Sometime Between Late 2015 & Mid 2017! Here’s My Rationale]
- Expect accelerating changes in our financial world. Some of them will be painful. [Read: We Can Ignore Economic Reality but We Can NOT Ignore the Consequences of Ignoring Such Reality! Here They ]
- Be careful, be safe, and preserve your purchasing power…[Read: Survival Investing: Stop the Inflation Monster From Devouring Your Savings – Here’s How]
Are higher gold prices inevitable?
Of course not! Fiscal sanity could return tomorrow to our world, but the best bet is a continuation of the conditions and policies of the past five years. In that case, holding gold and silver will be rewarding, simple, and easy.
Gold and silver have been a store of value for over 3,000 years [while] paper money systems have all eventually failed. You have a choice!
Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
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1. Gold Projected to Reach $4,000/ozt. Sometime Between Late 2015 & Mid 2017! Here’s My Rationale
I am not predicting a future price of gold or the date that gold will trade at $4,000, but I am making a projection based on rational analysis that indicates a likely time period for gold to trade at $4,000 per troy ounce. Yes, $4,000 gold is completely plausible if you assume the following:
2. Silver Projected to Reach $100/ozt. As Soon As Late 2015! Here’s My Rationale
There are many predictions for the price of silver. Some say it will crash to nearly $20, and others proclaim $100 by the end of 2012. The problem is that some predictions are only wishful thinking, others are obvious disinformation designed to scare investors away from silver, and many are not grounded in hard data and clear analysis. Other analyses are excellent, but both the processes and analyses are difficult to understand. Is there an objective and rational method to project a future silver price that will make sense to most people? Yes, there is! [And here it is!] Words: 1071
3. Survival Investing: Stop the Inflation Monster From Devouring Your Savings – Here’s How
Don’t let the inflation monster devour your savings and retirement. It will unless you take positive steps to protect your savings and retirement. I have the answers as to: •why inflation occurs, •why your purchasing power will decrease, •what happens if you don’t protect your purchasing power, and •how to protect your savings and retirement.
4. U.S. On An Unsustainable Path That Guarantees An Eventual Catastrophic Financial Melt-down – Here’s How to Get Prepared
Although our supposed leaders are presumably highly intelligent, educated, and knowledgeable, they act largely “brain-dead” as they lead the United States down an unsustainable path that guarantees eventual catastrophic financial destruction. Do you own enough gold and silver that you would feel safe in a such a financial melt-down? If not, why not? Words: 817
5. We Can Ignore Economic Reality but We Can NOT Ignore the Consequences of Ignoring Such Reality! Here They Are
As Ayn Rand said “We can ignore reality, but we cannot ignore the consequences of ignoring reality” so, with apologies to Ayn Rand, let’s explore some examples of ignoring reality. (Words: 1132; Charts: 1)
6. U.S.’s Runaway Financial Train is About to Destroy the Status Quo
People riding a runaway train can party and remain oblivious to the fact that the train is about to crash into a huge obstacle. Our runaway financial train is about to destroy the status quo as it crashes into the obstacle of mathematical consequences – the inevitable financial train wreck. “If something cannot go on forever, it will stop.” [Let me explain.] Words: 974
7. 2013 Will Not Be A “Happy New Year” For Most Americans
8. Take Note: Don’t Say You Weren’t Forewarned!
It is relatively easy to predict further commodity price inflation as a result of the massive money printing going on worldwide and that hard assets, not paper assets, will help protect purchasing power but it is much more difficult to project where else this money printing leads and to what extent a crash is inevitable. What is the endgame? Will it be another financial crash such as in 2008 or will it be a more destructive financial and economic crash that causes a severe but temporary disruption in the delivery of goods and services? Words: 1470
9. Sell Some of Your Gold If and When Any 1 of These 10 Events Occur
Most of us will sell our gold sometime between now and never so what events will probably indicate that the time has come to sell at least some of your gold? Words: 910
10. Commentary on QE3 Exclaims: “We Have Been Warned!”
QE3 looks like a desperate act to feed money to large banks, offload MBS toxic waste from their balance sheets, devalue the dollar against houses, commodities, and other currencies and create significant collateral damage in the form of consumer price inflation according to a number of respected economists and critical thinkers on the subject of QE3. [Let’s take a look at what they have to say.] Words: 1661