Last week the bond rating agency, Standard & Poors (S & P) downgraded the US Government’s debt repayment ability from a perfect AAA to a notch below at AA+. What’s the big deal?
Here’s what’s really going on behind the scenes that you won’t hear about on TV or read in the news:
The US is transitioning from being the world’s reserve currency to not being the world’s reserve currency.
That’s huge. Since the meeting at Bretton Woods after WWII, the US dollar has been the currency that the world relies on. It’s the currency that oil is traded in. It and US Treasuries have been the safest place to store money on Earth.
What’s happening really involves the very foundation of our money. In the 2008 crisis, when Congress decided to approve TARP for $800 billion and the Federal Reserve (a group of banks, not a government agency) decided to authorize the running of the printing press (otherwise known as QE or “Quantitative Easing”) and to simply print more dollars, rather than solve the crisis, our fate was sealed. The dollar would be devalued over time, which is exactly what you’re seeing play out now.
The problem with running the printing press is, like anything else in overabundance, money loses value (ie. its purchasing power to buy foreign goods like produce, clothing, cars, etc). Even though Alan Greenspan said on TV recently, “There is zero chance the government will default because they can always print more money.” The problem is, if you take that to the extreme, the VALUE of the money will be so little, it won’t buy much. And, in the long run, eventually, the interest on the debt will overtake the ability to create money fast enough.
So what’s the solution?
In my opinion (and many others’ I’ve read), a few years from now we will have to re-boot and tie our currency to something in fixed supply (gold), so our bankers (the Fed) can’t print so much money. China, Russia, and other nations have already been preparing behind the scenes to create a basket of currencies that will replace the US dollar as the world’s reserve currency. That means huge inflation of food and energy is coming in the years ahead.
Buying gold and silver on dips will be your best bet to fight the dollar devaluation. We are nowhere near the peak and have many years to make tremendous gains from what’s coming. Goldmoney.com and JHMint.com are two of my favorite ways to buy physical gold and silver. You can also invest in SGOL or PSLV, Canadian companies that hold physical gold and silver for you in a low-cost ETF (exchange traded fund) format. Whatever you do, wake up and start buying the dips. (Don’t buy after a big run up in the price as it is very volatile).
We haven’t even begun to see how high silver and gold are going to go before this is all said and done, but only people that have foresight to start buying now will reap the big rewards. The billionaires are already buying physical gold and silver in anticipation of what’s to come, what are you waiting for?