The Debt Ceiling Approaches!
On March 15, next Wednesday, Congress will have to decide whether or not they can agree on a budget that will raise the debt above $20 Trillion! That's 20 with twelve zeroes behind it! How did our country get into so much debt in the first place? That's easy, we spent money we didn't have by borrowing from the future. We became wealthy as a nation because the rest of the world paid us for our products and services while they went to war. What was our required payment? Gold!!! We did not take those countries' currencies as payment; we took their gold. By the end of WWII, we had over 2/3 of all the worlds gold! But then we got greedy. We started printing more dollars than we had in gold. Because our dollars used to be backed by gold, printing more dollars than we have in gold is called deficit spending. We used to have all the gold and no excess debt. That's why we became a prosperous nation. Now we have hardly any gold, and the most debt on the planet. We are no longer prosperous; we are barely staying above water. When Congress decides on a budget in less than 5 days, they have only two choices: they will either have to increase the debt, or the government will get shut down.
What is even CRAZIER about our debt it that IT CAN NEVER BE REPAID! The M2 money supply is only about $13 trillion dollars. How can the entire money supply be less than the debt we owe? That's because every dollar that exist belongs to someone else; it doesn't belong to you. All the dollars in your bank account are nothing but IOU's that belongs to someone else. That's why saving in gold and silver is such a smart move in today's economy. When the debt stops (and it has to because no debt lasts forever), those holding dollars will be absolutely wiped out, while those holding gold and silver will be preserved and may even add generational wealth.
Now is gold and silver a bargain at their current prices? Gold is currently $1200/oz while silver is about $17/oz. What is interesting about gold is that it always accounts for the money supply. This means that the value of gold is generally directly related to the money supply. Well I mentioned before that the money supply is about $13 trillion. The gold that the US has in reserves is about 300 million ounces. Therefore, dividing 13 trillion by 300 million should give you the price of gold at about $1200 right? Well if you divide those two together, you will find that gold should actually be valued at over $50,000/oz!!! Yes, you read that right. Gold should be well over $50,000 an ounce based on the increase of the money supply alone. Silver is an even greater bargain because it historically trades with gold at a ratio of 10:1. Today, it's ratio is a crazy 70:1! These prices for precious metals today are an absolute steal, especially if you understand that because of our huge debt, the day will come where no one will take any amount of dollars for gold or silver.
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Always remember, gold and silver is money. everything else is credit - JP Morgan
