America’s Debt Load And The Price Of Gold

The Market Gage - Dillon Gage's Precious Metals Newsletter

Just two days away from the inauguration and all the focus is on President Elect Trump’s plan to create jobs, grow the economy and cut corporate and individual taxes to stimulate the economy. Also he says he’s working on a infrastructure plan to rebuild America.

And let’s not forget the Federal Reserve has called for three interest rate hikes in 2017.

Oh and one more thing: Revamping Obamacare.

Sounds like a plan to Make America Great again…or is it?

One word comes to mind and I’m compelled to put it in capitals letters.


Our country is already running a budget deficit of over 500 billion dollars a year. Anyone care? Seems not.

If the Federal Reserve raises interest rates like they claim they will in 2017, this will
add hundreds of billions of dollars in additional costs that Congress must cover in this year’s annual budget.

One way to turn things around will be for Congress to drastically cut Social Security, Medicare and all other entitlements. What’s the odds of that happening? ZERO…

Oh by the way, as I’m writing this comment, President Elect Trump is calling for a weaker U.S. Dollar. He claims it is way too high. In a Wall Street article the other day he blamed this is in part on China holding down its currency and added that “our companies can’t compete with them now, because our currency is too strong. And it’s killing us.” Tuesday morning, one of Trump’s advisors speaking at the world conference in Davos said, “We must be careful of a rising dollar.”

So when you look at all I mentioned above, does any “one” word come to mind? I’ll keep you in the dark until I build up my case. (No scrolling down for the answer) Taking the information from above, here are the key formulas to find the “one”.

  • Lower dollar = ?
  • Lack of positive economic data that would give Fed the reason to raise rates = ?
  • The country’s debt spiraling out of control = ?
  • Possible trade war with China = ?

OK here’s the word: “GOLD”

Every topic I mentioned has the ability to fuel the price of gold. And if this all comes into play, I for one would expect much higher prices in the near future.

What’s in your vault?

Have a wonderful Wednesday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.