U.S. Economy Gives More Reasons to Own Silver and Gold
Ed Zimmer
A wise man once said "Hope for the best, plan for the worst." If he was still alive today he would probably conclude the world is "Nucking Futs". There are a number of indicators that point to the need to get out of debt, preserve your wealth, and prepare for the worst. Here's a compliation of items from here and there.
- In 2009, Treasury Secretary Geithner signed off on a report that indicated the Social Security Trust Fund (SSTF) would, in 2016, pay out more than it took in from payroll taxes. Like most things the Government says, they were wrong. In 2009, seven years too soon, the SSTF took in 670B and paid out 676B. The SSTF still was in the black, thanks to interest on some 2.5T in US Treasury Bonds, but it was less than half of what was expected for 09. This does not bode well for the future.
- COMEX silver in the warehouse finished the year at 112 Moz, down from 134Moz in 2008. Someone got their share of 22Moz of silver, did you get yours? By the way, registered silver to cover the contracts is down to 54Moz. How much silver is under contract on the COMEX right now? 621.6Moz which is about 12 times the amount of silver in the warehouse. Commercial Shorts, by the way, are 84% of all short contracts.
-Prime Mortgages are bankrupting at record rates and even the Government's much vaunted programs to restructure the loans are not working. 60% of the restructures are failing within 12 months.
-Swisse Gold is offering 1/2 ounce silver rounds now in quantity. Up until now, Gold was the only PM offering smaller units than 1 ounce. Unlike the Gold fractions, the Silver fractions don't yet have the same increase in premium. For those thinking in terms of division of assets, this is another opportunity. Can 1/4 and 1/10 ounce units be far behind?
-After spending nearly the entire month of December hardly spending a dime because of the spending limit, the US Government recorded a surge of spending on the last day of 2009, boosting the Federal Deficit to 12.3T, thanks to the Congress slipping in that last minute christmas present to raise the ceiling.
-Of course the Treasury is wasting no time in drumming up more money while the green shoots are greening. With Manufacturing up (according to the government), the Treasury says good time to sell some more debt. How much more debt? Estimates are 220B for just the first half of January.
-Stocks are continuing to rise as optimism is reflected in program trades that show lots of action on very little volume. No one, myself included, can figure out how Citigroup (C) can be 40% of the daily volume on the NYSE. There are not that many deluded people in the world with idle cash.
-Don't get me wrong, I am not advising sinking all your ready reserves into PMs, but having your own comfortable level of PMs is a strong strategy in what may very well be a chaotic 2010. The consumer is still pulling back, banks are not lending (although they say they are willing for the right person, hint, hint, wink, wink, nudge, nudge) when they can get .25% from the feds at no risk at all. Add to the fact that the Government is bankrupt and printing money to cover their --- and you have all the makings of a restful night's sleep. I really hope for the best, but I am going to prepare for the worst because our politicians are doing their best to throw their sabo's into the machinery.
Disclosure: Long SLV, GLD, Physical metals, retirement accounts
Ed Zimmer is a graduate of The School of the Ozarks (now known as College of the Ozarks) in Southwest Missouri. He spent 14 years in broadcast news in the Midwest covering, among other things, commodities. He is currently manager of a healthcare support facility doing over two million dollars a year in sales.
A wise man once said "Hope for the best, plan for the worst." If he was still alive today he would probably conclude the world is "Nucking Futs". There are a number of indicators that point to the need to get out of debt, preserve your wealth, and prepare for the worst. Here's a compliation of items from here and there.