Saturday, May 01, 2010

Government debt to GDP - yikes

These ratios show general government debt to GDP.

Ireland 40% UK 45% Spain 55% US 60% Germany 65% Portugal 70% France 70%
Greece 110% Italy 120% Japan 160%.

Studying these ratios, I have to think that almost fiat currencies are at risk. There's only one currency that is risk less since it needs no country to back it. That currency possesses one unique character. On it's own it IS intrinsic wealth. That currency is gold.

In the years ahead, fortunes will be made by those holding large commitments in gold. But forget profits, fortunes will be SAVED (preserved) by those who hold quantities of gold.

The other irony is that the US public owns no gold at all. Most Americans have never even seen a gold coin. As the price of gold rises, Americans are frustrated or puzzled as to what is happening. Remember, Americans have been brain washed for decades into thinking that gold is a "worthless relic." And now suddenly the world wants gold, and will pay a higher price for it every day. "Have we been swindled again?" Americans wonder as they watch the price of gold rise in dollar terms.

I want to repeat that in my rather lengthy experience, one of the most difficult feats to accomplish in this business is to enter a bull market and then have the guts, the tenacity and the foresight to ride that bull market over the length of its existence and to stay with it to somewhere near the top. What makes this so difficult is that all the while, the bull will try to shake you off its back.

I've been advising buying and accumulating gold for about ten years. I have no idea how many of my subscribers bought gold when it was below 400 and have held on to their gold ever since. From e-mails received, I estimate that hundreds of my subscribers did so. The higher gold goes, the more nervous and itchy these old-timers become. Many have never experienced the kind of profits (paper profits, or course) they now have, and they wonder if by staying with gold they are pushing their luck and becoming greedy. Every bull market I've been through ends up in wild speculation and frenzied buying. Somewhere ahead we're going to see that in this gold bull market. My advice: Stay with your gold and gold mining stock positions. The frenzy lies somewhere ahead. If I had to guess, I believe we'll see it before the year 2013.


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