April 21, 2011 – It looks like the sky is the limit for gold and silver prices. Although S&P made the weakest statement it could regarding the economic status of the USA, which told us nothing new, the government won’t be able to sweep it under the carpet despite its gallant efforts to do so.
The thing is, S&P is American through and through, and its bias during the financial meltdown was abundantly clear as it held onto AAA ratings for the junk that brought down the market. For it now to put out the slightest negative word about the US “is a disquieting, game-changing thought for a lot of the world … and now these people have turned to [gold and silver],” George Gero, vice president with RBC Capital Markets Global Futures, told the Wall Street Journal’s Tanya Shumsky.
It is getting ever harder to rein in inflation and a drop in credit rating would be the final straw. “Since 1989, S&P has issued 212 sovereign debt ratings with negative outlooks, subsequently lowering those ratings 118 times, or 56% of the time. Those downgrades usually take place within six months of the outlook change,” said Dave Kansas in the Wall Street Journal. Even S&P puts the odds of a credit rating reduction at one in three.
In 2009 England faced a similar downgrade in outlook but the country responded by implementing a strong austerity program and a year and a half later had its stable rating restored. Our government, on the other hand, is responding with more of the same arrogant off-handed dismissal of the change. That just won’t work any more.
Japan, the second largest holder of our debt understandably proclaimed its faith in the dollar. China, the largest holder, took proactive measures and escalated its program to globalize the yuan while continuing to stockpile gold. That symbolizes the choice every American has to make.
We can cross our fingers and trust the government to get us out intact or we can be proactive, putting as much of our wealth as we can into gold and silver coins, real money that will survive the worst of times.
Senior Staff Writer – GoldSilver.org