Tuesday, August 2, 2011

The Imminent $2.5 Trillion Debt Ceiling Hike Will Unleash A Gold Price Surge To $1,950 And Higher

http://www.zerohedge.com/news/imminent-25-trillion-debt-ceiling-hike-will-unleash-gold-price-surge-1950-and-higher

Read my comments below from the previous evening. :-)
Posted by Gaucho Greg at August 02, 2011
Labels: ,

1 comment:

  1. Gaucho Greg August 2, 2011 at 12:04 AM

    I wrote a letter to my family with the identical conclusion the previous night during overnight Asian trading. Great minds think alike. :-)
    "Just as I thought, our politicians reach an agreement on the raising of the debt ceiling at the 11th hour. And just as I thought, equities in Asia rally, while gold and silver correct. What is surprising, is that the correction has been very small, so maybe the market already priced it in and/or there is so much buying pressure in Asia that any selling of precious metals is met by even stronger buying pressure from investors looking to hoard the physical metals (as opposed to London's and New York's futures rigged exchanges).

    Of course, the rally in stocks and the decline in precious metals will be temporary, as markets realize all that occurred was that American's credit card limit was just raised, meaning we'll owe even more. How that makes us more credit-worthy and solvent is a mystery to rational minds. So despite the agreement, expect the credit ratings agencies to finally do their job and downgrade US Treasury debt.

    This will tank stocks and bond markets, and raise the attractiveness of precious metals. Buying small amounts of any dips, again averaging in, of precious metals is continuing to be the smart play. If gold drops another $50, or silver drops a few dollars, buy more of each. The price of gold should be on it's way to $1893 (it is $1618 as I type in Asia), as that represents another 17% rise in the monetary base once the next ceiling of $16.7 trillion is reached in Q1 2013 (convenient for Obama since the elections would be over by then). But if the economy does indeed recover a bit, that monetary base multiplies into a soaring money supply, at which point, we'll have runaway inflation, a currency collapse, and gold soaring to much higher levels. It will happen--it's just a matter of when.

    Next, since the economy is continuing to sink, the Fed will be forced to implement QE 3.0, or at least Operation Twist 2, a re-shaping of the yield curve. What that means is more easing, more printing of $, and rising inflation and precious metals prices. We will reach $1893 by the end of 2012, if not sooner. Book it."

    ReplyDelete

Subscribe to: Post Comments (Atom)