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Message: Federal Debt

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Federal Debt

posted on Oct 17, 11 07:38PM

Federal debt is up $191 billion in the last 30 days. The total is now $14.874 trillion. We will probably break $15 trillion in the next month. How does this effect gold? Total world production is 80 million ounces, so even at $2,000 an ounce, the U.S. would need the entire annual production to cover just $160 billion of this months shortfall. Also, our supposed entire holdings are about 260 million ounces so in the last month, the price of gold should have risen $750 an ounce to cover the shortfall. Another way to look at it is our total debt went up 1.28% last month which is 16.5% a year. The price of gold should thus be rising 16.5% a year just to keep up with its undervalued value vs the debt. This is very close to the rate gold has been rising per year for the last 10 years. If I can crunch these numbers, I am sure the Sprott's, Paulson's, Rothchild's and Chinese have too and will continue buying the dips until the U.S. gets its house in order.

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