Gold has risen 300% in the last decade. There has been much speculation regarding the future price of gold, ranging from gold decreasing to some previous level, to many experts predicting gold at $2,000 this year, and some even speculating on gold hitting $5,000 in the next few years. But the US government has made a definitive statement that indicates gold will go to at least $2,300 per ounce (double its current price). Let me explain.
First, my background for this discussion. Most of my readers know that I have been in the ministry for thirty-five years. Many don’t know that I’ve always worked to support my habit. Rather than take a salary from the churches I have served, I have worked in financial services, which allowed me to have flexible hours and make a good living in an interesting field. I have been a stock brokerage branch manger and vice-president, a trader for a national firm, and an investment banker. I currently advise a diversified, risk-managed investment fund.
For several decades I have realized that our government was driving our nation into bankruptcy. Once the most prosperous nation on earth, we now owe more money than any nation on the planet. Our currency was once the most respected in the world, the “reserve” currency. Now Socialist nations ridicule us, and Communist China is leading an effort to establish a gold-backed international reserve currency.
The average American family of four owes $250,000 toward the National Debt. That does not include their mortgages, student loans, credit cards or other consumer debt. That’s just their share of the National Debt. When you consider that not one family in a hundred could afford to pay a quarter of a million dollars to cover their share of this massive debt – even if they were so inclined – the United States of America is already bankrupt.
By the way, Communist China, which still refers to us as “The Enemy,” owns 24% of the National Debt held by foreigners. The Bible says in Proverbs 22:7, “The debtor is a slave to the lender.” The truth of this can be seen when you look at these recent Chinese actions toward the US which in the past would have resulted in justifiable trade sanctions. Instead, because of our huge debt, the US just hung its head in shame and did nothing as China treated us in an appalling manner:
1. In 2008 thousands of US pets were sickened and many died after eating pet food imported from China that contained the additive melamine. Melamine is an industrial chemical used to make plastics and fertilizer. The same additive has also been found in Chinese baby formula processed in 22 plants, which made over 6,000 infants ill and caused five deaths in China. So far no deaths of babies in the US have been reported.
2. Chinese drywall installed in over 100,000 US homes since 2003 has sickened thousands of residents and made a large number of the homes uninhabitable. Homeowners have claimed health problems that include nosebleeds, severe headaches, and the onset of allergies. When exposed to heat, the defective drywall can give off an odor like rotten eggs. It also causes metals, including pipes, electrical wiring and components of appliances to corrode. Air conditioners and other appliances often have to be replaced within months, according to reports. I was personally offered a brand new home in Palm Beach, Florida, six months ago for $180,000 because all the Chinese drywall in the walls and ceilings needs to be replaced, as well as most of the plumbing and all of the wiring. The house was to have sold for $1.5 Million.
3. Lead paint on children’s toys has been illegal in the US for decades because ingestion causes damage to brain cells. But China has shipped millions of these illegal toys to the US, resulting in huge product recalls in 2007. A June 18, 2007 article in the N.Y. Times began, “China manufactured every one of the 24 kinds of toys recalled for safety reasons in the United States so far this year, including the enormously popular Thomas & Friends wooden train sets, a record that is causing alarm among consumer advocates, parents and regulators.”
These three examples show the impotence of the US in the face of China’s arrogant disregard for our laws and the safety of our citizens. This failure to protect our citizens is due directly to our monstrous National Debt and the fact that China owns a huge portion of it. If this doesn’t make our so-called representatives in Washington realize the danger of running huge deficits and adding more to our National Debt every year, then I fear that a massive epidemic of Terminal Stupidity has infected both the Senate and the House. The only answer may be to vote every one of our “leaders” out and replace them with men and women who have not been exposed to the disease.
So how does this lead me to believe that the government has predicted that gold will double in price? It’s really quite simple:
1) The National Debt now stands at approximately $11 Trillion.
2) The Congressional Budget Office (CBO) has announced that the National Debt will double to $22 Trillion in the next 10 years.
3) When the National Debt doubles, so does the price of gold.
Here are a few notes to help us better understand the magnitude (actually, enormity would be a better word) of these numbers.
Our politicians, including our beloved president, throw around the phrase, “A Trillion Dollars,” as if it were so much pocket change. To help put it into perspective, a stack of one Trillion dollar bills would reach to the moon AND BACK, with $300 Billion left over.
The current National Debt does NOT include Obama’s new takeover of the health care industry. When it is added in, the CBO will add about $1 Trillion. Keep in mind that, although the CBO is nominally non-partisan, it does answer to the party in power. Also, that many of the costs of the bill are scheduled to kick in after Obama leaves office, so that the costs don’t look so bad. The real costs will top $2.5 Trillion.
Also, the Liberals, thrilled by their health care victory, immediately leapt into gear after Obama signed it to pass more financial industry takeovers, an immigration bill, and the energy bill. No one knows the real cost of these yet, but we do know that the energy bill alone will cost every American family almost $4,000 every year.
Concerning the CBO’s estimate that the National Debt will double in ten years, many conservative economists agree. However, they believe that it will double in five years, and that the Debt will TRIPLE within ten years. I guess it depends on which pack of liars you choose to believe. I haven’t found economists to be very accurate in the past, but conservative economists have a far better track record than the Socialist Keynesian economists who work for the White House today.
As far as gold going up in concert with the National Debt, just look at the record. (Or use common sense, for that matter. The higher the debt, the more the dollar drops. The lower the dollar, the higher gold has always gone.) But if you just look at the record, you will see that the ratio between the price of gold in dollars, and the level of our National Debt in Billions of Dollars has maintained a remarkable stability for as far back as I was able to find accurate data.
For instance, in 1970, gold was at $37 per ounce, and the National Debt was at $370 Billion – a 1 to 10 ratio. Today gold is a little over $1,100 per ounce, and the National Debt is at $11 Trillion (11,000 Billion) – the same 1 to 10 ratio. Of course, over the years the ratio has been higher and lower. But when I did a spot check of the ratio every five years for the last forty, the average ratio was 10.107 – amazingly close.
So, if even our corrupt government officials admit that the National Debt is going to at least double; and historically gold and the National Debt have maintained a strikingly stable ratio to one another; then we can reasonably expect that as the National Debt doubles, so will gold.
“What’s the point of all this?” you may well ask. “Should I sell my boat and my dog and use the money to buy gold?” No, that’s not why I wrote this article. Think of this as a warning.
As the National Debt increases, several things happen, two of which I mentioned above. (The dollar drops, and gold rises.) The other effect goes hand-in-hand with these, and should concern us all greatly. It is the fact that the greater the National Debt, the greater the inflation.
We can be fooled from time to time into believing that inflation is under control because the Federal Reserve manipulates the economy to give that appearance, and because politicians make all the right noises in press conferences. But none of that changes the fact that the US dollar has lost 96% of its purchasing power since 1933. That’s Inflation with a capital “I,” folks. In practical terms, it means that it takes FIFTY-FIVE 2010 dollars to purchase what ONE dollar purchased in 1933.
What in the world happened in 1933 to so dramatically change the financial course of our country? Well, in 1933 we had real money. Our $20 bills (gold certificates) were guaranteed – you could go to any bank and change them for a one-once $20 gold coin – REAL money. Today you can only change your $20 Federal Reserve Notes for two $10 bills, or four $5 dollar bills, or $20 $1 bills.
In 1933, by Executive Order, Franklin Delano Roosevelt (FDR) - one of the worst traitors to ever inhabit the White House - took the US off the Gold Standard and made it illegal for Americans to own their own money. You could actually go to prison for ten years if you didn’t turn your gold coins and gold certificates and accept worthless Federal Reserve Notes in exchange.
With his Executive Order FDR set several things in motion:
1) He removed the link between the dollar and gold, so that dollars no longer had to be backed by an equal amount of gold. This meant that politicians could print all the money they needed to buy all the pork they wanted to buy votes to get themselves re-elected.
2) He created the mechanism that made the modern deficit, the National Debt, and massive inflation possible.
3) He began the transformation of the US from the most prosperous nation on earth to the most debt-ridden nation on earth.
I believe FDR’s actions were deliberate, because they were in keeping with his Democrat-Liberal-Progressive theology of one-world government. He, along with many other Liberals who have followed him (including the current inhabitant of the White House, who idolizes FDR), believed strongly that the US would be better off if it gave up its national sovereignty and we all became “World Citizens.” And their actions over the last seven decades have moved us steadily, insidiously, toward that goal.
What better way could there be for the Liberals to accomplish their goal of a one world order than for the United States to experience hyper-inflation? They know that Americans are fiercely independent, that we will never willingly give up our nation. Even most life-long Democrats are very conservative when it comes to this subject. But they also know our weakness. They know that Americans tend to “vote their pocketbooks.”
If they can convince Americans that we will be far better off economically by giving up “just a little” freedom, they may win. Then it will be “just a little” sovereignty. I believe it will start with a North American Union of Canada, Mexico, and the US, a la the European Union. We’ll have the Amero, like their Euro. The ultimate plan is to merge eight such “Unions” around the world into the world government.
What can we do? On the spiritual front, pray as you have never prayed before. This is not a foregone conclusion. They have a plan, but if God’s people move as a might army on their knees, He will defeat their plan.
On the political front, I believe our best option is the Tea Party movement. Recent polls show that Americans view the movement like a political party, with favorable ratings as high as those of the Republican Party (both have ratings far higher then the Dems). However, I think their strength is that they are NOT a party. Get involved, attend rallies. My prayer is that the Republicans, who have a party structure, will see which way the wind blows, and start running candidates that the Tea Partiers can support – real Conservatives, rather than some of the wishy-washy RINOs we’ve seen lately.
On the financial front, you need to protect yourself against the current inflation, and the coming massive inflation. We may not see hyper-inflation, but inflation is absolutely going to deepen and widen. Read the 10-10-10 Financial Survival Plan and the other articles listed at the end of this article to see how you can protect yourself.
And yes, I believe gold should be part of your planning. In severe and hyper inflationary times, precious metals are always king. During the German hyper inflation, you could have bought an entire city block of prime commercial real estate in downtown Berlin for 25 ounces of gold. That would be like buying a block of downtown Manhattan for $29,000 worth of gold today.
The main point is that whatever you choose to invest in, it should be something that will beat inflation. The government tells us that inflation has averaged 4% for the last several decades. But the inflation calculator the United States used prior to Jimmy Carter says that the real rate is about 8%. (They changed the way inflation was calculated because they didn’t like the results!) And more reliable economic calculators show the current average inflation rate between 10 and 12%.
Regardless of which inflation rate you believe to be accurate, it is imperative that you consider three things:
1) Keep as little money in cash (including CD’s and other fixed-rate instruments) as possible) because its value drops every day.
2) Look for investments that will return more than inflation and taxes take from you – otherwise you aren’t getting a return on your investments, regardless of what the statement says.
3) Don’t depend on Social Security or any retirement plan as your sole source of retirement income. Put money aside to supplement your retirement plan.
The bottom line is that we can’t depend on the government to take care of us; we never could. As Ronald Reagan correctly said, “Government is not the solution; government is the problem.”
The 10-10-10 Financial Survival Plan
The Non-Federal “Fed”
In Debt We Trust
The History of Money: From Real Money to Play Money
The New Minutemen – Part III (About the North American Union)