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The Global Debt And Gold Solution

By Andrew LaneCommoditiesAug 03, 2021 04:29AM ET
www.investing.com/analysis/the-global-debt-and-gold-solution-200595661
The Global Debt And Gold Solution
By Andrew Lane   |  Aug 03, 2021 04:29AM ET
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Monday marked the day that the Treasury Department began conducting emergency cash-conservation steps to avoid breaking the Federal borrowing limit after a two-year suspension of the debt ceiling expired at the end of July.

These “extraordinary” measures will allow Treasury to pay off the government’s money without floating new debt for a period of two to three months. Following this, Congress will need to either raise or suspend the borrowing limit or risk the U.S. defaulting on its obligations.

So that leads us nicely on to what also happened in the last few days which has been the long tabled Infrastructure Bill, a plan by the Biden Administration which has come to near fruition. It is alleged the document containing the information is north of 2,500 pages; so don’t expect it to be settled in the morning. The figure is muted to be in and around the $1tn level.

It is worth pointing out that this bill does not include funding for climate change and social initiatives. Democrats have included this in a separate $3.5tn package, which they will aim to pass without Republican support. Putting to one side the politics, these are staggering numbers that the US doesn’t have. Coupling this with the many trillions spent since the pandemic in stimulus, which shows little sign of stopping any time soon, and the question remains how will the US fund it?

Basic stats don’t make for good reading: The US has a budget deficit the thick end of $3tn, a debt to GDP ratio of 129% and a national debt approaching $29tn. The world debt to GDP has surpassed 300% so really the US numbers don’t look so bad! But they are. They are really bad.

The blasé way that debt seems to be just shrugged off is so brazen. Alan Greenspan’s claim the US will never default, as they will just continue to print money seems to be the blueprint for Treasury Secretary Janet Yellen who appears of the same ilk. But how does it end? Well if history is anything to go by, badly.

You don’t need an economics degree to understand that you cannot borrow more than you can afford to pay back. This becomes known as insolvency. Unless of course there is a plan to pay it off.

Basel III has been muted as a nothing event for a lot of people who believed gold would rally overnight. Don’t get me wrong—it is plain to see that not a lot has happened, even with the LBMA exemption (which won’t hold water), however the bigger picture is what we’ve been vocal about for some time.

Basel III, we believe, is only a very small part of the plan to pay off the world debt. With CBDCs almost a certainty in a few years time some sort of event has to take place, otherwise the world will fall on its knees and banks—which hold the key to all this by the way—will collapse. That won’t be allowed to happen.

So what is this event? Is it a Global reset? Is it a wipe the slate clean with digital currency introduction? End of fiat currency? The simple answer is there are very few that know. Those who do will be head of central banks and governments and such discussions will have taken place at major world summits. So what have the world leaders and central banks been doing for the last few years? Borrowing more and buying gold, respectively.

So ask yourself this: Why are the US (and other major countries) spending ludicrous amounts of money they don’t have in such an audacious manner? Why was Basel III introduced and why does gold play such a key role?

The answer no doubt lies somewhere in the middle of our wildest thoughts; however what is clear is that gold in some way will be part of the puzzle. Our views on its price movement ascending higher towards the end of 2021 and beyond still stands as we expect it won’t be long until whatever game of debt is being played throughout the world becomes public knowledge. Get in while you can.     

The Global Debt And Gold Solution
 

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The Global Debt And Gold Solution

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Paolo Bertozzi
Paolo Bertozzi Aug 03, 2021 7:07AM ET
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cbdc backed by gold ( or silver). old fiat kept fiat. debt keeps to be in the old fiat and within a few years the 2 currencies will take different roads... fiat will devalue and cbdc gain value. just a possibility
Andrew Lane
Andrew Lane Aug 03, 2021 7:07AM ET
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Possible. Although it wouldn't be backed by Silver simply as it isn't valuable enough.
Paolo Bertozzi
Paolo Bertozzi Aug 03, 2021 7:07AM ET
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just an idea. if jpm really holds a enormous quantity of physical. If jpm is working for U.S. then gov can just declare that beginning next year (a few weeks ahead) the new digital dollar will be backed by a X quantity of silver located somewhere. Market will respond sending silver to 1000 usd or something like that. Some item in industry will became costly but I dont think it is important in a picture of this size
 
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