You can downgrade credit but you can’t downgrade gold bullion.
January 31, 2011 – Investors are seeking safe haven in gold bullion for all kinds of reasons – the sovereign debt crisis, unrest in the middle east, runaway inflation in emerging economies – but little is being said about loss of our nation’s creditworthiness. A single downgrade could spell disaster for our already precarious economy, signaling a loss in the faith that is the sole backing for the dollar. And according to Bloomberg columnist Kevin Hassett, director of economic- policy studies at the American Enterprise Institute, the “rating of U.S. long-term debt should be downgraded -- today.”
Hassett contends that left unchecked our debt will reach 135.4% of GDP in just six years, which is the point where Japan received its first downgrade. President Barack Obama’s State of the Union address clearly showed no regard for the urgency of reducing the deficit, which by all accounts should warrant a lower credit rating. But remember that Moody’s and Standard and Poor both failed to downgrade the Wall Street real estate junk that brought about the financial crisis.
That sort of favoritism cost investors their life savings and the price tag for doing it again with our national rating is unfathomable. However, the rest of the world isn’t stupid. We scoffed at China when their rating agency downgraded us last fall, but although the other western powers appeared to follow suit I doubt the message was lost. Time and again we have been warned by the likes of Brazil that we must back away from our fiscally irresponsible policies, but we stubbornly cling to a false sense of superiority that has no foundation in the new era of global economics.
Fiat money is rapidly falling by the wayside in favor of gold. Gold bullion investment is the best way we can protect ourselves from our government’s declining creditworthiness.
