Gold Watch by Capital Gold Group

According to the latest projections from the Congressional Budget Office, the U.S. Government will pay upwards of $5 trillion dollars in interest rates for the national debt over the next decade: an amount that’s more than half of the projected $11 trillion increase in debt held by the public during that period!

Assuming the government continues to extend expensive policies such as the Bush-era tax cuts, over 14% of revenue made by the United States over the next 10 years will be swallowed by interest payments. Where do these interest payments go and what does the high interest amount mean for the United States itself? According to Charles Konigsberg, president of the Federal Budget Group, a lot of the money paid in interest will go abroad: an estimated 40% to institutions and individuals outside the United States.

With significant amounts of government revenue being paid towards high interest amounts, other important priorities that could use that money suffer and the deficit only continues to rise despite payments.

The current national debt sits above 15 trillion dollars and as that amount continues to increase, causing more fear and frenzy, physical gold is the safe-haven investors flock to as protection against volatile markets and the devaluation of the dollar.

As we’ve mentioned before here at GoldWatch, now is the time to be proactive, not reactive when it comes to the protection of your long-term savings from financial shocks with the safety and security of physical gold.

Countries worldwide felt the effects of rising oil prices last week as oil rose to a 10-month high above $125 a barrel on February 24. This jump in prices not only prompted an outcry from consumers and responses from policymakers around the world including President Barack Obama, but it also brought to light just how much of an economic shock it would be if Israel does take military action against Iran.

On Sunday, finance ministers and central bankers from the world’s leading economies said at a G20 meeting in Mexico that they were “alert to the risks of higher oil prices,” and discussed at length the impact of the sanctions on oil from Iran would have on crude supplies and global growth.

According to London based financial analyst Edel Tully in a recent report, while rising oil prices will contribute to a slowdown in economic growth, they do provide a considerable upside for gold.

“In addition to geopolitical risk premium and the impact of elevated oil prices on inflation expectations, the potential for expensive oil to put a drag on global growth also has upside implications for gold,” said Tully

With the threat of an attack by Israel on Iran, gold is positioned to skyrocket as geopolitical tensions intensify.

Historical data shows that global economic uncertainly compounded by geopolitical tensions and possible military conflict will result in increasing gold prices. Experts are already projecting gold to hit $2,000/oz in 2012, so be proactive not reactive in response to these forecast increases and start protecting your long-term savings and retirement accounts before it’s too late.

Hope all you GoldWatch readers had a Happy Presidents Day! Now to the news…

After Seven months of negotiations, Greece won the 130 billion euros ($172 billion) in aid it needs to avoid a March bankruptcy in the early hours of the morning in Brussels. Unfortunately, any relief from the aid received may be short-lived after Greece signed up to a program of reduced spending and economic reform aimed at slashing debt to 120.5 percent of gross domestic product (GDP) by 2020 from about 160 percent in 2011.

With investors and central bankers chipping in to relieve the debt burden faced by Greece, economists from Citigroup Inc. to Commerzbank AG still have grime outlooks for the country, concluding that the country may again fail to deliver on it’s debt amid a fifth year of recession, looming elections and social unrest.

The odds that Greece will remain hindered by its massive amount of debt was exposed by a European Union and International Monetary Fund expert analysis that highlighted just what could go wrong with a country unable to grow out of its fiscal hardships by devaluing its currency. In a worst-case scenario, the debt faced by Greece may rebound to 160 percent of GDP by 2020 rather than nearing the 120 percent the IMF deems “sustainable.”

“The bailout bandage is on, but it won’t take much to unravel,” said David Miller, partner at Cheviot Asset Management in London. “The euro zone has done its best to ensure that Greece will deliver on promises, but there is considerable scope for backtracking on deficit reduction.”

As highlighted by a recent Bloomberg article, “By supporting Greece, Europe’s high command chose the financial and political cost of awarding fresh money over the risk of a bankruptcy that could splinter the 13-year-old euro area.” Over 385 BILLION euros have been committed to save Greece, Ireland and Portugal, with investors predicting the government in Lisbon will need more support.

“The often-cited Greek can has again been kicked down the road,” said Carsten Brzeski, an economist at ING Groep in Brussels. “The good thing is that the can is still on the road, but it requires a huge amount of stamina and patience to keep it there.”

So what does this mean for gold? A default on a currency such as the euro would cause investors to flock to the safe haven of physical gold as instability in global markets increases and prices rise.

If you’ve been waiting to buy gold, now is the time because with experts projecting prices to reach $2000/oz in 2012, it’s a bargain!

In today’s economy, debt and inflation are problems that are not only getting worse at a government level, but at a local and individual level as well. According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154%! The mentality of most Americans (and the government) is that if you need it, you can get it on credit.

Need a car? Get an auto loan.
Need a house? Get a mortgage.
Need to fill up your house with stuff? Get a credit card.
Need an education? Get a student loan.

The sad fact of the matter is that most Americans have willingly allowed themselves to become enslaved by debt. It is a rarity to hear that someone is “debt-free,” as most individuals are busy either going into more debt or paying off the debt accumulated in the past.

In fact, Howard Dayton, author of Your Money Map, says that 43% of all American families spend more than they earn each year!

Sound like a familiar situation? The United States Government spends more than it takes in each year as well. The current national debt sits above 15 trillion dollars but rather than make the necessary cuts to manage debt, the government has the luxury of raising the debt ceiling or printing additional amounts of money at the expense of the value of the dollar…

As debt and inflation continue to increase, causing more fear and frenzy, physical gold is the safe-haven investors are flocking to as protection against volatile markets and the devaluation of the dollar. Don’t wait to buy gold, buy gold and wait!

Gold hit its highest price levels since mid-November on February 3, as expectations that US monetary policy would remain ultra-loose, boosting investor appetite for bullion.

With last month’s quarterly Fed press conference signaling a consideration of further monetary easing and interest rates remaining near zero until late 2014, gold prices have been lifted 12.5% in 2012 alone.

On February 2, Fed Chairman Ben Bernanke defended the bank’s policies against Republican lawmakers claims that there were risks of  sparking inflation. Bernanke argued that the economy needs the continued Fed support.

“Risks remain that developments in Europe or elsewhere may unfold unfavorably and could worsen economic prospects here at home,” Bernanke said. “We will continue to monitor the situation closely and take every available step to protect the U.S. financial system and the economy.”

Bernanke continued, ”Even as fiscal policymakers address the urgent issue of fiscal sustainability, they should take care not to unnecessarily impede the current economic recovery…The sluggish expansion has left the economy vulnerable to shocks.”

Reaffirmation from the Fed that they are committed to keeping rates low has given gold the necessary boost to hold gains and also break key price resistance levels above $1700/oz.

Despite the recent pullback in gold prices, as debt and instability continue to increase, causing more fear and frenzy, physical gold is the safe-haven investors are flocking to.

If you’ve been waiting to buy gold, now is the time because with experts projecting prices to reach $2000/oz in 2012, it’s a bargain!

Have Opinions? Questions? Comments? Leave Them Below

Gold is on the rise!

Last week, President Obama delivered the State of the Union address and the following day, Fed Chairman Ben Bernanke addressed the media in the quarterly Fed press conference. With these two events and the issues discussed and brought to light, gold rallied for the 7th week in a row.

During the State of the Union, President Obama focused on a mission to protect the American Dream despite the dismal economy…

“No challenge is more urgent. No debate is more important. We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share and everyone plays by the same set of rules,” said President Obama in his address.

The full transcript of the speech is available here but to summarize, what the president continues speaking about is more of a wish-list rather than a to-do list for the remainder of his term as President before elections in November.

One statement in particular caught my attention during President Obama’s address, “Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.”

Why did this statement catch my attention? It’s a very sly way of asking to increase the debt already faced by the United States.

The wars in Iraq and Afghanistan were funded by money the government was already borrowing so what Obama is actually asking for is an increase in spending in relation to the Pentagon. Why is this a problem? The United States is still running huge deficits and faces a national debt of over $15 Trillion dollars, so none of the imagined savings would “pay down the debt” until the United States actually had a running surplus of money.

This brings me back to why this statement caught my attention.

Obama’s proposal would do nothing to alleviate the debt crisis here at home, his proposal would only CONTINUE to add to the debt.

In addition to this statement partnered with Obama’s high tax insistence, more regulations, huge debt and much larger government, an environment of uncertainty and volatility continues to plague the United States and the U.S. dollar.

But that’s not all.

Following the State Of The Union Address on Tuesday, Wednesday, Fed Chairman Ben Bernanke held a quarterly Fed press conference to discuss interest rates as well as the Fed’s outlook for the economy. Needless to say, Bernanke’s conference was bad for banks, but great for gold.

Bernanke signaled on Wednesday that the Federal Reserve may consider further monetary easing, after stating in the press conference that interest rates would remain near zero until late 2014.

What does this mean for the dollar? More money printing, higher inflation, and the continued devaluation of the already weak dollar.

“We are prepared to take further steps in that direction if we see that the recovery is faltering or if inflation is not moving towards target,” Bernanke said. “It’s an option that’s certainly on the table.”

Adding more fuel to the fire, after a two-day policy meeting, the Fed repeated its view that the economy faces “significant downside risks” – also known as the threat of Europe’s massive banking crisis hurting the United States, a problem that sees no resolve in sight.

As debt and instability continue to increase, causing more fear and frenzy, physical gold is the safe-haven investors are flocking to as demonstrated by the yellow metal continuing its rally over $1700/oz this past week. If you’ve been waiting to buy gold, now is the time to baton down the hatches and prepare for the economic storm that is upon us…

Have Opinions? Questions? Comments? Leave Them Below

Uncertainties surrounding debt crises across the Eurozone and increased tensions in the Middle East have been continuing to push gold higher as investors anticipate economic backlash worldwide.

On January 13, S&P downgraded a total of 9 Eurozone countries, putting tremendous pressure on the currency union’s ability to fight off a worsening debt crisis.

With more credit downgrades, the cost of European government debt is driven higher as investors demand more compensation for holding bonds now deemed “risky.” In turn, higher borrowing costs put more financial pressure on countries already struggling with heavy debt loads and slow economic growth.

Europe is in a “very grave” economic situation, said European Central Bank President Mario Draghi, following the downgrades.

A shock to the U.S. economy like a collapse of the euro would be devastating because if the Eurozone economy collapses, the US government is likely to face a situation of soaring unemployment, a failing economy, and a bankrupt financial system.

In addition to the euro debt crisis, the European Union has agreed to implement an embargo on Iranian oil, highlighting increased political tensions in the region. Due to these geopolitical issues, a flood of safe haven buying into gold could follow.

As a result of the Eurozone credit downgrades and increased Middle East tensions, gold will continue to climb on safe-haven demand by investors seeking protection against volatile markets and the devaluation of the euro and dollar… Protect YOUR Wealth Today!

What are your opinions on the debt crises plaguing the Eurozone and the potential problems arising from tension in Iran?

Leave Your Thoughts Below.

On January 11, President Obama asked Congress for another $1.2 trillion in government borrowing authority, the third and final request under the previous debt deal made in August with lawmakers that averted a U.S. default.

Since the budget law was approved, the debt limit has been raised twice, by a total of $900 billion. In President Obama’s latest request, the limit would rise to $16.394 trillion, which the Treasury Department estimates will fund the government until late 2012.

With the president’s notification to congressional leaders, a 15-day countdown has begun for lawmakers to consider and vote on a joint resolution disapproving of the increase.

While the request to raise the debt ceiling is a formality laid out in the agreement made in August 2011, which gives the president authority to veto any disapproval resolution that clears both chambers of Congress, the national debt will play a huge roll in the presidential campaign and congressional races decided in November.

So what can you expect for gold as 2012 goes on?

As mentioned in last week’s post, with volatility continuing to spread across all markets, gold is poised to extend its best rally since the 1920s in the wake of not only the debt ceiling talks to come, but Europe’s debt crisis, expectations of slowing economic growth, and rising inflation.

With prices poised to rise above $2000/oz in the current economic market, gold is the safe-haven investors can rely on to protect their retirement accounts and other long-term savings in times of economic uncertainty.

Don’t Wait To Buy Gold, Buy Gold And Wait! 

With volatility continuing to spread across all markets, gold is poised to extend its best rally since the 1920s in the wake of Europe’s debt crisis, expectations of slowing economic growth, and rising inflation across the United States and abroad.

Many financial experts, including Edel Tully, precious metals strategist for Swiss bank UBS and one of the most accurate gold price forecast contributors to the London Bullion Market Association in 2011, has come out tipping gold prices to rally to levels above $2000 in the coming year.

“A time will come when a gold rush could propel the metal significantly higher than last year’s levels. The catalyst for that, given gold’s recent relationship with risk, is unclear. But quantitative easing in the euro zone has to be near the top of the list and so too is the risk of an increasing dovish Federal Reserve Open Market Committee,” said Tully.

As mentioned in last week’s post, the forecast for gold to return to seeing a “two” as the front number in 2012 is shared by Morgan Stanley, TD Securities, Bank of America-Merrill Lynch and SEB Merchant Banking. These banks see gold either averaging above $2,000 or at least trading to that level at some time during next year.

With prices poised to rise in the current economic market, gold is the safe-haven investors can rely on to protect their retirement accounts and other long-term savings in times of economic uncertainty.

Don’t Wait To Buy Gold, Buy Gold And Wait! 

While gold prices have pulled back a significant amount in the past week, the yellow metal is still on an uptrend, trading at over $1600 per ounce.

As highlighted by an article from Forbes.com, while Gold investors in the U.S. may still doubt whether fundamentals are in place for the yellow metal to continue its decade-long rally; Chinese authorities definitely aren’t.

Chinese gold demand, both retail and financial, has surged as of late, with gold consumption doubling to about 20% of global supply in the last decade and reserves climbing to 1,054 tons, or about 1.8% of its foreign exchange reserves.

“No asset is safe now. The only choice to hedge risks is to hold hard currency – gold,” said Zhang Jianhua, head of the People’s Bank of China’s research bureau.

China has the right idea in holding gold.

The forecast for gold to return to seeing a “two” as the front number in 2012 is shared by several investment banks. Morgan Stanley, TD Securities, Bank of America-Merrill Lynch and SEB Merchant Banking are among some of the banks who see gold either averaging above $2,000 or at least trading to that level at some time during next year.

So what are you waiting for?

With China recommending its citizens to increase their gold holdings and several banks predicting gold to hit $2000/oz in 2012, now is the time to buy gold. As we say here at Capital Gold Group, you don’t wait to buy gold, you buy gold and wait.