Its tough time for U.S. as its raises country's debt limit, S & P downgrades its ratings & a fear of double dip recession. U.S. Federal Reserves Sits on the World's Largest Gold Reserves
To overcome this issue, why not sell some of its gold? This would overcome the issue & keep the U.S. Government going.
Currently, most of has the view that the Gold would go higher & everyone is got bullish. However, if U.S. government sells its gold, things would be upside down as the gold rates would decline due to excess supply in the market.
So Are you Bullish or Bearish on Gold? Whats Your View? - Post here as comment. Thanks
I strongly doubt that the US government would be so bold as to do such an egregious thing as FDR did in 1933.
ReplyDeleteI’ll bet the US wishes it still had its massive stock piles of Silver? Maybe they learned their lesson to hold the country’s wealth instead of frittering it away…I doubt it!
ReplyDeleteEven if the gold was successfully brought to market, the federal government’s massive borrowing appetite would mean only a brief reprieve.
US entire gold reserves is estimated at 9000 tones or $0.4 trillion at current prices. While the current U.S. debt ceiling is $14 trillion, Even if they sell ALL their gold, it’s a measly 3% extension of their debt limit.
ReplyDeleteIf the US unloads some of its Gold and Silver reserves the prices will come crashing down and the Dollar will surge.
ReplyDeleteBe prepared for a world recession like we have never seen before, new ways of doing business and maybe,if we are lucky policies that put survival of human kind ahead of short term profits.
ReplyDeleteI can remember when 396 BILLION was an unimaginably huge sum. Now, it is only enough to, “provide a brief reprieve” in the insane growth of our debt. The suicidal behavior of our government and perhaps worse, the indifference and ignorance of the populace is beyond comprehension.
ReplyDeleteEverybody would then want gold and nobody would want the US dollar. The bond market would tank as investors fled for precious metals and the dollar become worthless.
ReplyDeleteUSA might have another form of government a lot sooner that 2022. Even the Republican demigod, Ronald Reagan, warned of the great danger of not raising the debt ceiling in a timely manner, with the subsequent loss of trust in the US dollar.
ReplyDeleteImagine what the price of gold will go to if the USA misses even one interest payment. $3,000? $5,000? Who knows?
Leaving aside the argument that gold could be cheaper later on, since your point about central banks buying up US gold is not dependent on its price but on its availablity for purchase, how can we assume that the same central banks, who are not buying up the gold that is already in the market, would want to do so any more after August 2?
ReplyDeleteConsequently, I feel reassured that they will either not buy US gold in large quantities or, if they do, then the scenario of damage to the US economy and bond markets, which you have described, will prevent the US from offering it for sale in the first place.
ReplyDeleteIn Weimar, they sold all their gold and were unable to go back to a gold backed currency to save themselves. It is like taking the brakes out of your car, even if you are not on a gold standard. The world knows we have gold. The possibility of going to a gold standard is the only thing preventing a total disregard of our currency.
ReplyDeleteThey have alternative, instead of selling their asset (Gold), they should increase country's income, buy increasing tax. Because selling asset is a temporary solution.
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