A Hard Reality
Rather than face these unpleasant facts and consider where they are leading us, most people continue to think, "It can't happen here, this is America."
Meanwhile, our country has been depending on a printing press to make our economic system work. When is the last time that happened in America? (Hint: the Civil War.)
How many other things most people didn't think would ever happen in America have happened recently? What about the collapse of our investment banks, the bankruptcy of General Motors, the liquidation of Fannie Mae and Freddie Mac, the failure of AIG, hundreds of banks being seized, millions of homes in foreclosure, real unemployment rates close to 20%. We could go on.
As we frequently point out to our critics, the question isn't when this crisis will begin – it started in 2008. The question is, when will it end and how bad will it get before it does?
We believe every American ought to be ashamed, outraged, and furious that the most powerful political union in history proceeded down the path of these bankrupting policies. But most of all, you ought to be afraid of where these policies have led us.
Don't forget: In about six weeks, the Federal Reserve will stop buying Treasury bonds.
That's the first time since March 2009 our economy will stand on its own two feet. And we expect... just like a child riding a bike without training wheels for the first time... it will crash.
We are not alone.
Bill Gross, manager of the world's largest bond fund, has put 4% of his fund short U.S. Treasury bonds. Just consider that for a minute: The most powerful fixed-income manager in the world (not just in America) is selling the U.S. Treasury short.
The University of Texas endowment fund recently took physical delivery of $1 billion gold bars. That's an enormous bet that the U.S. monetary system falls apart, from some of the wealthiest and best-informed investors in the world.
Finally, in what we believe is the ultimate death knell for the U.S. dollar, our trading partners are moving out of the dollar and into gold. Mexico, for example, one of our most important trading partners, just purchased almost 100 tons of gold.
All around the world, more and more central banks are selling dollars and buying gold. They're doing so because they can plainly see America's credit has become unreliable and the value of the dollar is likely to decline. If you think you might be trading in something other than U.S. dollars in the future, then you might not want to be holding U.S. dollars. You might want to be holding that currency. And if you can't hold that currency (like you can't hold the Chinese yuan), you might consider holding gold.