Gold Will Rise as U.S. Debt Increases
The Congressional Budget Office has recently forecast the US budget deficit for fiscal 2009, to reach a mind boggling $1.825 trillion, or approximately 13% of GDP. Next year, the budget deficit is expected to total $1.43 trillion under Obama’s budget plan. Furthermore, the CBO sees the US deficits between 2010 and 2019 totaling $9.1 trillion, thereby raising doubts about America’s ability to finance its debt at low interest rates, and whether it can maintain its top tier AAA credit rating.
Herkimer Diamond
The exploding US budget deficit and the Fed’s policy of flooding the financial markets with US dollars, knocked the value of the greenback 7% lower in the second quarter, and heightened fears on global bond markets about a surge in inflation. This had the effect of eroding the value of China’s holdings of US Treasury notes, estimated at roughly $1.45 trillion, putting Beijing on the offensive with Washington.
With news like this an investment into gold seems prudent.
