It’s kind of an odd feeling, really. Seeing that I’ve been ranting about the U.S. unfunded liability overhang and its one logical solution, you’d think I’d be out there wagging my finger in peoples’ faces and doing a touchdown dance as our debt is (symbolically and politically, I know) downgraded from “pristine” once again, and the rout of the U.S. dollar is on in earnest.
Instead of taking great joy in $1,700+ gold and $40+ silver I’m seeing tonight, and preparing myself to buy others’ margin calls tomorrow morning, I’m sitting here more than a little bit numb. This is still my country after all, and it’s still a punch in the gut to see it caught in a debt trap of its own construction. Yeah, we saw it coming, and that’s why we’ve been building a fortress of gold and silver to shelter us.
But will it be enough?
I honestly don’t know. For all I know, my miners will get waxed along with the rest of the market (if in fact the market doesn’t just head fake completely tomorrow). My sturdy ETF’s might malfunction, my options might turn to gruel and even my physical might be tough to transfer if the President decides to go “Full Metal Franklin Delano” on us. Let’s face it folks, it’s all fine and good to prepare financially, but we are entering into unchartered waters here, and it’s not like we’ve got Horatio Nelson at the wheel, here.
I really didn’t think we’d arrive at this hour this quickly — in 2011. However, the combination of torpid growth and high unemployment have hit tax collections to such a degree that the current rates of spending have blown a hole in our debt capacity well before we expected in the mid 2000-teens. There will be painful choices ahead that will make this summer’s kabuki theater play look like the first round of Let’s Make a Deal in comparison.
I don’t doubt they will include tax increases, and likely across the whole bulk of the citizenry. There are just not enough wealthy people with taxable income around to bring us to any sort of solvency — even with massive cuts to the Federal budget. No, we’re going to have to go back to the old ways — where everyone contributes at some level, and there are no more free-riders. If you try to get this done on the back of “him behind that tree,” you will inspire nothing but enmity in the capital providers, which will in turn only drive our economy to darker depths.
I am hoping this shot across our bough will be enough to drive our politicians to a serious assessment of our national dent — both on and off-balance sheet. If instead this opportunity is squanderd and the pols decide it’s more electorally profitable to scare old people into believing they’ll be left high and dry at the prospect of any reform, God help us all.
In an event, we should have a good day in the gold sector tomorrow. I will be looking very closely at the action not only on the physical metals themselves (gold, silver, platinum), but also at the $HUI to keep an eye on the miners, and on AUY in particular. It seemed to take a much lighter hit last week on the pullback, and that may mean it’s getting ready to really take off after that long consolidation.
Good luck to us all.