The Congressional Budget Office (CBO) issued its annual long-term budget outlook report, and the 2012 numbers are not promising. In fact, the CBO estimates that federal debt will rise to 70% of GDP by the end of the year. The report also paints a stark picture of entitlement spending, as retiring Baby Boomers will cause government spending on health care, Social Security, and Medicare. CBO also fails to factor in unexpected wars and expensive foreign entanglements, and we should not assign too much validity to predictive models based on peace. Judging from the actions and rhetoric coming from both parties in Washington, new military entanglements in Syria and Iran may well spike military spending in coming years.
The value of the U.S. Dollar declined more than 30% from 2001 through 2004, plunging 5% in just a few weeks. For a long list of reasons, including massive increases in U.S. government deficits totaling trillions of dollars, the cost of a prolonged war against terrorism and a massive trade imbalance, this trend may be just the beginning. This means U.S. Dollars could now be worth less and less every day. Which also means that investments pegged to the U.S. Dollar could be worth less and less every day. Gold, silver and platinum, though, are held and traded throughout the world...and their true value (that is, their purchasing power) is not solely or directly dependent on the falling fortunes of the U.S. Dollar.
Precious metals, therefore, can be a form of protection against a falling U.S. Dollar. As demonstrated during 2003 and 2004, as the value of the U.S. Dollar declined, gold and silver prices and the value of precious metals expressed in dollars increased. Today's financial markets are increasingly at risk from terrorism, political instability and war. As we saw so after the 9/11 tragedy, financial markets can be closed down, and remain closed down, for extended periods of time.
As terrorism incidents continue to increase around the world, it is not unreasonable to expect further (and potentially more severe) disruptions in financial markets, banking and commerce in the future. Whenever and wherever tension or hostilities break out, people everywhere quite naturally gravitate toward the assets they trust most. And today, even in our high-tech-driven 21st century, the asset class millions rely on in times of trouble is gold and silver. Precious metals have always been, and likely will continue to be, a valued form of "wealth insurance" in good times and bad.
After the infamous stock market "bubble" debacle in early 2000 wiped out trillions of dollars of investor equity, the major stock indices have failed to return to anywhere close to their previous highs. Gold and silver prices, on the other hand, have increased dramatically—
The Incessant Flex Account is a way to purchase precious metals using up to 3-to-1 investment leverage. This can be a powerful long-term trading vehicle during periods of rapidly changing precious metals prices. And many financial experts have predicted and continue to forecast rising gold, silver and platinum prices in the months and years ahead.
