Investors in gold are peculiar creatures. Cagey, alert, a little suspicious, they always have one foot in the door no matter how nice the room looks. If you are not true history buffs, you have a solid understanding of what happened in our economic past … and therefore have a pretty good idea of what will happen in our economic future.
So investors in precious metals are looking to the Obama administration and what the economy awaits. Needless to say, most have one foot firmly planted in the doorway.
Setting aside, for the moment, the positive social implications of America’s first black president, the danger of combining another potential big spender in the White House with our current economic woes could be a formula for economic Armageddon, many believe.
Which would certainly be fine for gold.
Everything has become big expenses
Not that President Bush was exactly stingy. Starting with a 2001 budget of $ 1.9 trillion, the Bush administration introduced a 2009 budget of $ 3.1 trillion for a whopping 63 percent increase.
In a word, alas!
Still, that kind of spending was somewhat offset by three years of a Democratic-controlled Congress. What happens now that we have managed that one-armed bandit who votes and everything has emerged as a Democrat?
Do not offend members of that party in any way. Both parties, as mentioned, have this troubling compulsive spending disorder (CSD). But in the environment of last year’s big spending, controversial $ 700 billion bailouts and billions in bailout plans, having a president and a Congress, of the same party, with a possible overwhelming majorityEager to spend even more truckloads of money can be just the wrong move at the wrong time.
“President Barack Obama will have the necessary majorities in the new Congress to carry out his plans to increase spending on national infrastructure and a massive fiscal stimulus package,” wrote Peter J. Cooper of Arabian Money.
Oh again! It could have been so much better for us if Washington had been hopelessly stagnant for the next four years.
Four Reasons Obama Could Be Good For Gold
So why is it smart to keep your gold in 2009 (and maybe even add more to your portfolio)? Four reasons:
1 / “Our last and best hope“Syndrome. According to a Associated Press Survey, about 72 percent of Americans believe, following the recent elections, that President Obama will change the economy and, after all, there will be a happy ending.
That’s fine … for now.
Despite this current enthusiasm for our brilliant new president, the outlook for the 2009 economy, in the eyes of analysts at least, is almost uniformly bleak.
Here is an example: “The world economy will suffer a substantial decline in 2009 … It is a dark scenario,” admitted Antonio García Pascual of the International Monetary Fund.
And that’s just the problem. If Obama represents America’s “last and best hope” – and the miserable economy worsens anyway – our Obama optimism could evaporate, our collective hopes could fade, and things could get downright ugly.
Do we have one last and best hope after Obama?
We make. Gold.
two /An international crisis is predicted. Both Vice President Biden and Colin Powell alluded to it. “Problems will always be there and there will be a crisis that will occur on January 21 and 22 that we don’t even know about right now,” Powell said on Meet the Press on October 19, 2008.
Overlooking its glaring contradiction – that we don’t know what this crisis is, but we know enough to predict that it will happen on January 21 and 22 – an international emergency to test our new president, whether it happens in those days. dates or at some other time of the year. In the years to come, it would unleash even more fear and uncertainty on already overburdened Americans.
Fortunately, the antidote to that kind of fear has always been gold.
3 / Show me the money. Talk about big spenders, according to the October 24 edition of the Wall street journalPresident Obama promises to spend another $ 4.3 trillion even as he cuts tax revenue.
So where is he going to get all that money from?
“A trillion here, a trillion there, and very soon we are talking about real money. In total, Obama promises at least $ 4.3 trillion of increased spending and reduced tax revenue from 2009 to 2018 …”, wrote Cato . Alan Reynolds of the Institute in that WSJ article.
Reynolds concludes with this: “Obama has not given any clues about how he plans to pay for his health insurance plans, or double foreign aid, or any of the other 175 programs he has promised to expand. Although he can expect to collect an even larger share of the loot. From the top of the heap, the harsh reality is that this Democrat’s pursuit of hundreds of billions more in income each year would have to reach deep into people’s pockets much further down the economic ladder. words “.
Okay … so if our new president doesn’t have a viable way to generate the funds to pay for his 175 programs, where does that leave us? With only two avenues: mind-blowing tax increases or …
4 / The H word. Hyperinflation. “Come on,” you might say. “Things wouldn’t get too bad.” Well, let’s wait. But as things stand, even without Obama’s 175 programs, we are already more than a few miles down the hyperinflationary path.
Where do you think these ransom dollars are coming from? Kind aliens visiting our galaxy? No, they come from the Treasury Department printers.
Which means that they are generated out of nowhere.
Wrote Looking for Alpha’s Jason Hamlin, “… top investors such as Jim Rogers, Robin Griffiths and Jurg Kiener now predict that the insistence of global central banks on printing their way out of the economic turmoil is setting the stage for a hyperinflationary holocaust, a domino effect of which will be the acceleration of gold towards 2,000 dollars, since the demand for precious metals exceeds the supply “.
Oh again! or