LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines

Is A Run On Comex And London Gold & Silver Occurring?
By: Dave Kranzler

Gold SWOT: Silver Up on Stronger Industrial Demand
By: Frank Holmes, US Funds

Falling Into Place
By: Ted Butler

Social Unrest Rises as Confidence Falls
By: Clint Siegner, Money Metals

Gold Seeker Report: This Week in Mining Issue #15: Mining Getting Back to Normal
By: Chris Marchese, Chief Mining Analyst at GoldSeek

It Doesn't Get More Bullish Than This!
By: Rick Ackerman, Rick's Picks

Precious Metals Update Video: Gold Monthly Chart Riding the Bollinger Band Upside
By: Ira Epstein

Economics in Orbit
By: John Mauldin

COT Gold, Silver and US Dollar Index Report - May 29, 2020

The Comex Has Big Problems
By: Dave Kranzler


GoldSeek Web

The Volcano of Debt

 -- Published: Monday, 11 June 2018 | Print  | Disqus 

By Craig Hemke

Just as gravity propels the lava from Kilauea inexorably toward the sea, a mountain of public and private debt looms over today's markets.

Earlier this week, the Boards of Trustees for both U.S. Social Security and Medicare released their latest updates on the "solvency" of the programs. The advisories can be read here:

Though it's common knowledge that these programs are vastly underfunded, the degree to which the pending crisis is accelerating should come as a shock to all Americans.

In their report, the Trustees state that the "Social Security Trust Fund" will be exhausted in 2034. Though this retirement income program is already running on fumes due to simple demographics— and the notion of a "trust fund" is really nothing more than an accounting trick

The report that it will be insolvent in just fifteen years should come as a cold slap to the face for anyone still clinging to the belief that the funding problems plaguing this income redistribution program can be put off indefinitely. From the report:

“Social Securitys total cost is projected to exceed its total income (including interest) in 2018 for the first time since 1982, and to remain higher throughout the projection period. Social Security s cost will be financed with a combination of non-interest income, interest income, and net redemptions of trust fund asset reserves from the General Fund of the Treasury until 2034 when the OASDI reserves will be depleted.”

Even worse was the report from the Trustees of the Medicare program. Sharply rising healthcare costs and the increase in program participation due to aging Baby Boomers led the Trustees to project insolvency as soon as 2026. That's just eight years from now! Also from the report:

“The Trustees project that the Hospital Insurance Trust Fund will be depleted in 2026, three years earlier than projected in last year s report. At that time dedicated revenues will be sufficient to pay 91 percent of hospital insurance costs. The Trustees project that the share of hospital insurance cost that can be financed with Hospital Insurance Trust Fund dedicated revenues will decline slowly to 78 percent in 2039.”

While higher tax rates and means tests may serve to push out the insolvency dates, there remains very little political expediency to enact these changes. Thus, as these critical U.S. government entitlement programs begin to falter, the only agreed-to solution from both sides will be debt monetization and currency creation from the Federal Reserve. Borrowing costs will soar, and the devaluation of the dollar will be significant. Markets will be traumatized, and threats to the hegemony of the U.S. dollar as global reserve currency will move to the forefront.

Again, this debt avalanche is coming just as assuredly as lava flows downhill.

What can you do about it? Well, you have two choices:

1. Party like it's 1999. Go on about your business as if nothing is the matter and assume that every tomorrow will be just like yesterday. When the day of reckoning arrives, just hope that you can get out of town before the evacuation routes become blocked and impassable.

2. Take steps now to prepare for this monetary eventuality. Reduce your debts. Reduce your exposure to rising interest rates. Reduce your exposure to devaluing currencies. Plan to self-fund your retirement expenses, including healthcare.

And one of the essential steps of preparation is to buy physical gold and silver. Both metals are known as "sound money" and have been recognized as such for millennia. They serve as protection against currency devaluation, and you can see this in action today when you review the recent changes to the price of gold in Turkish lira or Brazilian real. Both Turkey and Brazil are dealing with monetary uncertainty brought about by political and economic unrest. As the value of both Turkish lira and Brazilian real have collapsed, the price of gold in those currencies has soared, which once again proves the value of gold as a protector of wealth. See below:

Of course, the price of gold in U.S. dollars has underperformed and underwhelmed for the past five years. However, it's only a matter of time before the dollar price of gold resumes its upward march in a trajectory that mirrors the exponential growth of total U.S. government debt. See the chart below showing this relationship since the turn of the century.

So, again, the choice is simple. You can turn a blind eye to economic Mother Nature and the principles of Newton, OR use your time wisely to prepare today for a calamitous tomorrow. One of the easiest and simplest steps you can take is the gradual addition of physical precious metal to your portfolio.

Begin your preparations today before the growing mountain of debt "lava" inundates and overwhelms you.

Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at, an online community for precious metal investors.

The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.You may copy, link to or quote from the above for your use only, provided that proper attribution to the author and source is given and you do not modify the content.”


| Digg This Article
 -- Published: Monday, 11 June 2018 | E-Mail  | Print  | Source:

comments powered by Disqus


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2019 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


The views contained here may not represent the views of, Gold Seek LLC, its affiliates or advertisers., Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, Gold Seek LLC, is strictly prohibited. In no event shall, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.