March 17, 2011 – Failing confidence in equities and worries about the bond market are early signs of a retreat to the haven of gold and silver investments. Many expect the Fed’s anticipated withdrawal from the Treasury market to be a precipitating event with long reaching repercussions.
One camp believes that the sudden removal of what has been 70% of Treasury demand will cause prices to plummet, taking the entire bond market with it. The world’s largest bond fund, Pimco, has take the threat so seriously that it has eliminated 100% of its holdings in US debt. Smaller investors have heeded the warning with a strong switch to ETFs. But others contend that the economy is in such a sorry state that recovery is unlikely to gain any momentum, holding back inflation and attracting safe haven investors to Treasuries.
There is no question that the economy shows no sign of recovery. Government data just released shows 397,000 first time jobless claims, wiping out February’s highly touted gain of 250,000 jobs. Our trade deficit has swollen another 15%. And the Rasmussen Report’s index of consumer confidence has fallen to its lowest level since last September. But it seems to me that Treasuries are the last place one should seek shelter.
Wanton printing of dollars brought us to this point. The skyrocketing cost of food and energy has eroded the wealth of everyday Americans who have been victims of stagnant wage growth for the past few years. And the world is scrambling to find a new reserve currency before the dollar dwindles to nothing. There is little left faith in the dollar, and holders of US debt are becoming increasingly worried.
Central banks around the globe are bulking up with gold while divesting of dollar debt, and Mexico is looking to support the peso with silver. Here in America, individual investors would be wise to take the cue and buy gold and silver.
Senior Staff Writer – GoldSilver.org