Today’s 500 plus point sell-off is pretty self-explanatory against a world-wide rout in stocks. The world is deeply in debt, and there is no quick fix. Europe and America are slowing down and taking the rest of the world with them. Italy is also having major trouble handling its debt, right along with the other PIIGS (Portugal, Italy, Ireland, Greece and Spain). Italy is the 8th largest economy in the world. You thought Greece was a problem? Wait until Italy cries bailout or default. Spain surely cannot be far behind Italy; its debt problems are immense as well. I wonder how long it will take before France and England are added to the PIIGS list.
Back on the other side of the pond, America is spending money like there is no tomorrow. Congress just voted to borrow another $2.4 trillion. That total will be used up in a little more than a year, and then there will be another debt ceiling fight or the U.S. will risk another default. U.S. debt will hit $16.7 trillion before government spending is even slowed down, let alone cut. This is what an oncoming systemic failure looks like, and people are scared. They should be scared. Today, the big guys pulled the trigger on the sell-off. They got out of the way of the falling knife. It’s funny how Wall Street tells Main Street to “buy and hold” while it harvests money on the short side. I think the next wave of selling will come from the retail investor. I wish them luck getting their money out of the brokerage.
Financial reporters are already saying the market is “oversold,” which, in my mind, says hold on and get ready to buy more. The case for QE3 (the third round of money printing from the Federal Reserve) is going to be called for by everyone to “save the market.” After all, Fed money printing is what caused the run up since the 2009 low. Maybe it will work again before the system crashes and the dollar vaporizes in a hyperinflationary cloud. I don’t know why stock investors and bond investors think they should never take a loss. Every market player should be forced to suffer the consequences of poor risk management. I guess we do not have capitalism anymore, just a kleptocracy.
Gold is down a paltry 1% and stands at $1,650 and change as I write this post. Already, some of the talking heads are saying the gold trade is done. Do not believe them for a minute. That doesn’t mean there will not be severe corrections and sell-offs, but the trend is going up right along with the borrowing, money printing and continuing banker bailouts. Renowned gold expert Jim Sinclair predicted years ago that gold would hit $1,650 an ounce in 2011—mission accomplished. Where’s gold heading? Here’s what I wrote in a post called “Print More Money” just a few months ago. I wrote, “Sinclair expects gold to trade much higher this year and predicts after 2015, it will be priced at more than $12,500 an ounce. You should not take Sinclair’s predictions lightly. In 2002, he predicted gold (priced at around $350 an ounce) would trade at $1,650 an ounce by January 2011. Today, it is well over $1,500. In 1974, (the average price that year was $159.00 an ounce) Sinclair predicted gold would top out at $900 per ounce in 1980–it hit $887.50. Sinclair says, “If QE is even slowed down, the net result would be a public loss of control on the part of what is seen as the U.S. economic management.” So, he expects gold will rise because the powers that be will print more money.”(Click here to read the complete post.)
Sinclair is not amateur. He is a pro and has a track record to prove it. He started a website several years ago (JSMineset.com ) to warn people of the coming calamity. While I was at CNN, I interviewed him about what measures people should take to protect themselves. He was right then and still right today. If you watch the video from April of 2008, listen to the screams from my fellow CNN colleagues when I say Mr. Sinclair is predicting gold will hit “$1,650 in the next couple of years.” It sounded outrageous to them, but, of course, we now know it was right on target. I’m betting Sinclair will hit the bull’s-eye again at $12,500 per troy ounce. That April 2008 video is below for your viewing pleasure. Enjoy!
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Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.