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Gold and Our Growing National Debt

By LINDON, Utah - January 9, 2019 No Comments

Our national debt keeps growing, and the price of gold keeps growing with it. The budget deficit is projected to reach one trillion dollars in 2019, but the politicians have other priorities. Their only plan for dealing with the debt is shutting down the government over five billion dollars of spending on border security. It seems that nothing is going to change in Washington, but you can act to protect yourself by investing in precious metals. 

America's national debt soared from about $260 billion in 1945 to almost $22 trillion today. That would be like a man who weighed 260 pounds somehow going up to 22,000 pounds. The reason that sounds so absurd is that a pound is a fixed unit of measure, while the US dollar is continually debased. The dollar price of a pound of gold is up more than 3,500% since 1945. Gold becomes more important for preserving your savings and your sanity as the national debt grows.

Disturbingly, the most recent run-up in the budget deficit comes during a time of apparent prosperity. In the fiscal year 2017, the federal budget deficit was a very inauspicious $666 billion. Those are the good old days because the deficit is expected to go up to $1 trillion this year. We are all borrowing an extra $1,000 every year, so it shouldn't be surprising that we feel richer. I've compared the recent stock market bubble to the 1990s, but at least we balanced the budget back then.  

Those hoping that a return to divided government will rein in deficit spending are likely to be disappointed. The last time the Democrats ran the House, they passed the infamous "Porkulus" bill that included massive infrastructure spending. Porkulus added over $2,000 per person to our national debt, but I didn't see big improvements in our roads. As election time nears, the politicians will want to show that they can "do something" for the American people. I'm afraid that Congress will pass Porkulus II, and Trump might sign it to keep his promises on infrastructure.

As the government increases our debts, the gold price tends to rise. There was a strong correlation between monthly gold prices and America's national debt between 2003 and 2013. Since then, gold has fallen behind. That suggests that gold is undervalued today and could be ready for several years of high performance. More importantly, buying gold might be the best way to hedge against our growing national debt in the long-run.