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You Must Own Gold Before April 1, 2017

Before This Happens...

Written by Luke Burgess
Posted September 1, 2016

The U.S. national debt is projected to hit $20 trillion exactly 212 days from today...

That's April 1, 2017.

According to estimates from Brillig.com, American debt has increased an average $2.39 billion a day for the past three years. Using these estimates, the national debt will cross the $20 trillion mark on April Fools Day, 2017.

Now, it's ultimately irrelevant whether or not the U.S. national debt will cross $20 trillion exactly on April 1, 2017. It is, however, vital for you to own gold well before that debt figure is reached.

And that's simply because whenever it actually happens (on, before, or after 4/1/17), the U.S. national debt crossing the $20 trillion level will be both national and international news.

Here's a parody of the future Drudge Report headline in advance...

Matt, please feel free to use this image and headline setup when it happens.

We also have to consider that crossing $20 trillion is a key psychological level. It's an easy figure to remember, and I expect to hear it repeated for months after actually crossing $20 trillion, as the number makes its way from headlines to barstools.

The national debt will be an issue the next president will be forced to address. And it will continue to both cast further doubts on the U.S. financial situation and erode confidence in the Federal Reserve.

A recent piece by Jon Hilsenrath in the Wall Street Journal, titled "Years of Fed Missteps Fueled Disillusion With the Economy and Washington," showed the Federal Reserve has been dealing with an overall crisis of confidence since the turn of the century. The article says:

... confidence in the central bank’s leadership has dropped. An April Gallup poll found 38% of Americans had a great deal or fair amount of confidence in Ms. Yellen, while 35% had little or none. In the early 2000s, confidence in Chairman Alan Greenspan often exceeded 70%.

Fed Confidence August 2016

News of the U.S. national debt will continue to erode confidence in the Fed's ability to conduct sound monetary policy, as well as in all American financial institutions, including the U.S. dollar.

As a result, there will no doubt be a run to safe haven assets — particularly gold, which is ultimately the basis of all labor storage.

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I suspect the Federal Reserve will actually be working to contain the value of the dollar at this point as it discusses the next move. An overly strong dollar can cut into profits as U.S. products for exports become more expensive. And the Fed wants to do everything it possibly can to support GDP.

Fed members have also stated on numerous occasions in the past several weeks that inflation is below their target. In other words, they want to inflate.

I suspect that some of the recent strength in the U.S. dollar is still the result of Brexit. The British pound has not recovered a bit since.

Sept 16 Pound August 2016 Sept 16 USD August 2016
Click to Enlarge

So, even at current levels, I think gold is a very strong buy right now. Going forward, the U.S. national debt crossing $20 trillion will be big news, both nationally and internationally. This will no doubt spur interest in gold as a safety hedge all around the world. And it's something you should preempt by owning gold today.

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Luke Burgess
Energy and Capital

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