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Shore up the house with gold bullion before the walls come crashing down.

April 04, 2011 – The return on gold bullion investments outpaces inflation. Cash investments are now losing more than 5% annually. Equities are up, but at the cost of depressed wages — and that threatens to come crashing down. Therefore buy gold bullion. QED.

All along the Fed has said that it wants Americans to stop saving and start gambling on equities. Somehow it thinks removing every trace of fiscal responsibility is just as good an idea for the citizens as it is for itself.

"Americans who have done everything right, have worked hard, saved their money and stayed out of debt are the ones being punished by low interest rates," Richard Fisher, a voting member of the Fed's open market committee told the Wall Street Journal.

Meanwhile earnings are up for the S & P 500 some 12% last quarter over the year before, boosting returns and making equities even more enticing. But those gains were possible only because high unemployment lets employers squeeze more from their workers. Real wages are falling at an alarming rate the will rapidly eclipse their decade long decline of 5%.

Money has to be going somewhere. It certainly isn’t buying new houses — last month saw the fewest sales of new home in nearly a half century of keeping those records. Even the profits of corporations that actually produce something can’t account for it all. On the other hand, “for every dollar of corporate profit made in the United States of America in 2011, nearly 30% comes from shuffling money,” says Bill Bonner in the Daily Reckoning.

That has to backfire. Even if Americans bought into Wall Street’s scheme, it is doubtful that they have been left with sufficient disposable income to keep it running much longer.

Don’t expect things will improve when QE2 gets mothballed in June. Before you can say QE3 the Fed will be doing whatever it takes to keep Wall Street rolling, and printing money is all Bernanke has left in his toolbox. There is no reason to expect Bernanke won’t be tossing another few trillion into the overfilled pool on top of the half trillion Japan just threw in.

Something has to give. When it does everything will come crashing down. Except, of course, for portfolios shored up with gold bullion investments.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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