The Beginning Of The End
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Gold, Silver And Oil Are All Skyrocketing And That Is Bad News For The U.S. Economy

The following is one statement that you should get used to seeing: “The price of gold set another record today.”  Today, spot gold reached a new all-time record of $1461.91 an ounce before settling back a little bit.  Silver is also skyrocketing.  At one point today silver hit $39.75 an ounce.  It seems inevitable that at some point we are going to be talking about $50 silver.  The price of oil is also continuing to relentlessly march upwards.  At last check U.S. oil was at about $108 a barrel.  All of this is great news for those that are investing in gold, silver and oil, but all of this is also really bad news for the U.S. economy.  Why?  Well, because when these commodities go up in price it is a sign that the U.S. dollar is dying and that our country is getting closer to economic collapse.

Traditionally, there has been an inverse correlation between the price of gold and the value of the U.S. dollar.  Usually when the U.S. dollar goes down, the price of gold goes up.

One of the main reasons why gold has been so strong over the past year is because the U.S. dollar has been rapidly losing value.

So why is the U.S. dollar declining?

Most economists point to all of the quantitative easing that the Federal Reserve has been doing.

So exactly what is quantitative easing?

Well, it is basically like playing Monopoly with someone that reaches under the table and pulls out a bunch of extra money when they are almost broke.

The Federal Reserve has been creating huge amounts of money out of thin air and has been pumping it into the financial system.  It is essentially cheating, and it is highly inflationary.  The rest of the world has not been amused.

But quantitative easing is not the only issue.

The truth is that whenever the U.S. government goes into more debt, more money is created.  The U.S. has been running trillion dollar deficits for several years now, and this has created a lot of new money.

This is another reason why it is so important to get the U.S. government debt situation under control.  The Obama administration is projecting that the budget deficit for this fiscal year will be about 1.6 trillion dollars.  This is highly inflationary and it will continue to destroy the value of the dollar.

In addition, the rest of the world is beginning to have serious doubts about the sustainability of U.S. government debt.  They are starting to lose faith in the U.S. dollar and in U.S. Treasuries.

In fact, investors are losing faith in paper currencies all over the globe.  The euro is on the verge of a massive crisis.  On Tuesday, Moody’s downgraded Portuguese government debt for the second time in a month.  Portugal needs a bailout, but they are far from alone.  A half dozen European nations are experiencing a financial meltdown and the European debt crisis could spiral out of control at any moment.

Because of all of this financial instability, investors have been seeking some place safe to put their money.

For many investors, precious metals and commodities have been the answer.

In fact, silver has been doing even better than gold lately.  On Wednesday, silver set a new 31-year high for the third day in a row.

People are even starting to talk about the possibility of $50 silver.  Most analysts would have considered such talk complete nonsense a year ago.

But now nobody is laughing.

The price of oil is also soaring.  Some of that is due to inflation, but not all of it.  The truth is that when it comes to oil there are other factors at play.

Unfortunately, a high price for oil is far more damaging to the U.S. economy than a high price for gold is.

The U.S. economy has been designed to use massive amounts of cheap oil to transport massive quantities of goods over vast distances.  When the price of oil goes to $100 or $150 a barrel, it fundamentally changes the dynamics of our economic system.

Nobody has ever been able to prove that the U.S. economy can successfully handle a price for oil over $100 for an extended period of time.

Do you remember what happened back in 2008?  The price of oil hit a record high in June and then the entire financial system came unglued just a few months later.

The price of oil affects the price of almost everything else.  Almost all forms of economic activity use energy.  Almost all goods have to be transported a significant distance.

When the price of oil goes too high, some types of economic activity simply become unprofitable.  If the price of oil stays this high from now on, there are many businesses across America that will be forced to close.

A high price for oil is also going to hit U.S. consumers really hard.  According to AAA, the average price of a gallon of gasoline in the United States is now $3.70.

Many are convinced that the average price of gasoline is going to shatter the all-time record of $4.11 that was set back in July 2008.

So how much did a gallon of gas cost a year ago?

One year ago the average price of a gallon of gasoline was just $2.83.

Over the past 12 months the average price of gasoline has gone up about 30%.

So has your paycheck gone up by 30% over that time?

The truth is that wages have been very stagnant in the United States for a long, long time.

That means that U.S. household budgets are being increasingly stretched.  People have to fill up their cars so that they can get to work or to school.  Americans can cut back on pleasure driving to save money, but most of the driving that all of us do is to get to places that we have to be.

So if gas costs more that means that consumers are going to have less to spend other places.  Consumer spending accounts for approximately 70 percent of the U.S. economy, so any slowdown in U.S. consumer spending would be extremely significant.

Already a substantial percentage of the American people are feeling quite stressed about gas prices.

According to a recent Associated Press-GfK poll, approximately two-thirds of the American people believe that rising gasoline prices will cause significant hardship for their families over the next six months.

We are heading for some really difficult economic times.  As I wrote about recently, this economy has millions of Americans feeling depressed, but that is not the appropriate response.

Rather, once we understand how bad our economic problems are we should feel empowered because then we can start focusing on real solutions.

And somebody really needs to start focusing on solutions because panic is starting to abound.  Many top corporate insiders are selling off stock like there is no tomorrow.  The biggest bond fund in the world, PIMCO, has been getting rid of all of their U.S. Treasuries.  When Wall Street big shots start freaking out you know that the hour is late.

It certainly doesn’t help that the Middle East is in a state of chaos and that the Japanese economy is falling apart as a result of the recent disasters.

In these uncertain times investors are seeking something safe.  They are turning to real “global currencies” such as gold, silver and oil.  Paper currencies are rapidly losing favor and rampant inflation is on the horizon.

So where do all of you think that gold, silver and oil are going?  Feel free to leave a comment with your opinion below….

  • Peter E

    One of the offshoots of these times will be that the current approach of outsourcing (overseas) is suddenly going to be less desirable. The US is in the fortunate position that there still are competent people who can actually make things and have “operational skills”. There could be a big shift in incomes from those who are financial whizzed and ship jobs overseas to those who know how to do things!

    Oil will have a big impact on food prices and agriculture. The US, Australia and Canada export a lot of grain and horticultural produce. As the price goes up the suffering in the developed world will escalate with renewed violence. Some of the despots will be forced to spend on agriculture and profitable persuits at the expense of military and personal billion dollar bank accounts like (Mubarrak)

  • D rumsfeld

    Quote ‘ U.S. oil was at about $108 a barrel’.

    OK fine, but 75% of the world’s oil is priced according to Brent and it is about $124 a barrel.

  • http://www.no2foreclosures.info David

    As I had predicted in my “Nine 2011 Predictions” article published on November 23, 2010:

    “Silver and gold will continue to climb in 2011. Silver will increase much more than gold in 2011, as the “Crash JP Morgan, Buy Silver” viral campaign started by Max Keiser in early November will take off exponentially in 2011. Silver will breach $50 per ounce in 2011.”

    This is prediction number 8. Check out number 9 and that something about a country in Africa.

    http://rense.com/general92/stdr.htm

  • David
  • Josh

    The only thing I have been investing in for the last 2.5 years is silver. The best thing I ever did.

  • William

    The last time gas prices were so high was in the summer of 2008. Since then, many, many fuel inefficient vehicles have been purchased by Americans. Now that gas prices are up so strongly again, the owners of these gas guzzlers are whining. Did not these knuckleheads think about the future prices of gas when they bought their gas hog?? Bottom line is that most Americans just do NOT THINK.

  • William

    As Gerald Celente points out, gold is probably reaching $2,000, because not only people are concerned with the economic collapse and are looking for safer investments, the continuous printing of digital money is devaluing the dollar.

  • bul2taco

    I think people should start packing there bags for they will be tripping out here very soon:)

  • Silver Bean

    Well written and serious food for thought. We have seen this before, about 31 years ago. The prices of gold and silver fell dramatically. Something similar happened during the Weimar republic in Germany and now Germany’s strong economy is being pressured to bail out other European countries. The oil producing countries lived in near poverty until the first Arab oil embargo. My point being the prices rise and fall over time. The only unknown is what will happen after this cycle passes? Who knows which countries will be the economic power houses? We should be drilling our own reserves and not going hat in hand to foreigners begging them to sell us our oil. Nobody seems to be pushing the idea of going and getting our own reserves.

  • Trust in Jesus Christ

    Gold and silver will just continue to climb for years to come as the dollar heads for collapse. For those who cant afford Gold or Siver to invest in, I would suggest stocking up on food. Have a supply of at least 6 months or more. And also stock up on basic essentials such as toilet paper and soap. I believe that the US and world economy will most likely collapse in the next 1 to 3 years due to a number of issues including QE3, high oil prices, hyperinflation, and in the end, probably WW3. Those who live in rural farmland communities will most likely survive and as far as those who live in urban regions will have a more difficult time. All I can say is be ready and prepared for the END.

  • http://stockresearchportal.com Ian R. Campbell

    Over the past 3 years I have been developing a Resource Stock Research website, and each day send an e-mail to Subscribers in over 100 countries commenting on economic matters and precious metals prices. I don’t pay much attention to those who make forward physical gold price predictions, because I think that is a mugs game. However, I do pay a lot of attention to those who predict the short-term (up to one year, but preferable in these volatile times a shorter period) trend in the physical gold price. Last week I surveyed the readers of my daily e-mails on the very question of whether they owned physical gold and physical silver, and whether they did or didn’t, what they thought the price trend of each was likely to be through the balance of 2011. The results of that survey are available at http://goo.gl/KvpNJ along with my own updated economic forecasts for the balance of 2011 (the two things happen to be in the same document).

  • Maria

    Did J.P. Morgan CEO Jamie Dimon recently comment that we should expect economic crisis every five to seven years?

    http://www.noquarterusa.net/blog/2010/02/09/elizabeth-warren-exposes-jamie-dimon/

    Excuse me!

    This from a Class A board member of the Federal Reserve Bank of New York…a board “elected by member banks to represent member banks”.

    Wasn’t the Federal Reserve established in 1913 to maintain STABILITY in the financial system? Imagine that, we have had it wrong all these years? Or did someone forget to inform Mr. Dimon of this minor detail?

    Anyone who believes that the Federal Reserve is trying to rescue our economy is living in lala land. The collapse of our economy is not an unfortunate side effect of Federal Reserve actions. It is the intended purpose of their actions. QE and money printing are happening in coordination with efforts of Tim Geithner (former President of the NY Fed) and his Dept of the Treasury.

    Economic rescue (much less prosperity) is not a result of purposeful devaluation of the dollar. True, it is easier to pay our international creditors when they accept counterfeit money, but it sure as heck doesn’t help build value in the dollar assets of John Q. Public’s retirement accounts, or the value of his property, or his purchase of life’s little conveniences like food, utilities and gas.

    The rise in gold price may not affect the average American like the rise in fuel price RIGHT NOW, but it will soon. What happens when dollars become worthless in international markets because of QE and money printing? Gold and silver become the “currency” of choice. Then the price of gold and silver will matter…so will the price of food.

    Gold and silver will reach numbers no “expert” is willing to project publicly. $15,000 an ounce gold and $1,000 an ounce silver is possible if the world cannot stop the economic collapse.

  • Galactic Effectuator

    TodaMoooon!!

  • George

    Great article! I enjoyed reading this great information very much. Keep up the great work!
    Please don’t forget the role of the trade deficit in driving down the US dollar. The higher our trade deficit with China climbs, the lower the dollar goes.

  • sharonsj

    The value of the dollar has been going down for some time now, thanks to the Fed. I can’t afford to buy gold, but I’m buying up cheap silver jewelry at flea markets as a hedge (my version of playing the stock market).

  • Greg L

    All the wars we have gotten into could have paid for a solar panel for every house in the united states!

  • http://www.champs-c.com Houston

    Drudgereport.com

    new 7.4 quake in Japan. It is 10:22am in Houston, TX

    “It certainly doesn’t help that the Middle East is in a state of chaos and that the Japanese economy is falling apart as a result of the recent disasters.”

    Brother you said a mouthful!

  • 005

    I don’t really know how long the paper
    will hold on. It seems like the system itself just keeps decaying bit by bit.
    Yet feels like the last straw is just holding on till the extreme last second.
    Just my opinion.

  • Rob

    Thanks for another great article. How is it that most folks don’t see this coming. I try and talk to friends, neighbors, family, and tell them to start preparing. They sneer, laugh, and make fun of me. They tell me I’m hoarding…but I explain, if peole start stocking up now, things will have a chance to replenish…then when the crunch comes, they won’t even have to leave their home for the store, and add to the chaos or lack of goods. We are not supposed to FEAR, but as men we are to be providers for our families.We are to see things before they happen, and act accordingly. Fear not the present circumstances…respond to the circumstances, and be prepared to protect your family. Blessings to you all, and start NOW, if you haven’t already. Be part of the solution, and not add to the problem.

  • Mike

    My projection is silver will be $50 or more by the end of the year. Gold will be close to $1800 and gas prices will break $4 a gallon again and soar on towards $5.

    We were born for these times, each of us. Keep faith and remember the Lord will not leave us comfortless.

    Psalm 23:4 “Yea, though I walk through the valley of the shadow of death, I will fear no evil: for thou art with me; thy rod and thy staff they comfort me.”

  • Johnson

    Why do you allow this service to post your complete article? I would think that would take away from your blogs visibility and potential ad revenue.

    http://www.benzinga.com/11/04/985003/gold-silver-and-oil-are-all-skyrocketing-and-that-is-bad-news-for-the-u-s-economy

    • Michael

      That is true, but my philosophy is that the more people that see the articles the more good they will do.

      So I allow anyone that wants to post the articles to do so. In fact I encourage it.

      I really want to make a difference. So when my articles are posted elsewhere and are seen by hundreds of thousands of people I am very happy.

      I also try to link to others who are doing great articles out there so that attention can be drawn to them as well. If we all work together perhaps we can wake America up.

  • KB

    all-time high gas of $4.11??? We were paying $4.47 in 2008 for gas, and it is back up to $3.89 right now.

  • john

    Don’t forget the other precious metals

    Brass and Lead

  • andrew

    we say in Italy the knots are reaching the comb…………

  • DownWithLibs

    GB+MOP+LDZN-N+C-MP+X-C-BX-LZ=? ;-)

  • Greg L

    No need to stock up on toliet paper there will be plenty (dollars) when the dollar collapse happens.

  • Rick

    I think gold will be at $2000 by the end of third quarter 2011. Easy!

  • BigM

    I just wish I had the money to BUY gold and silver!! :(

  • http://www.no2foreclosures.info David

    Gold, Silver And Oil Are All Skyrocketing And That Is Bad News For The . . . Ponzi . . . U.S. Economy

  • DMyers

    Gold and silver are gauges in the river of inflation. They stand as a constant against which we approximate true value. Against true value, how does a dollar look?

    GregL: Nice crisp comment about the solar panels. That’s a very true and telling point about our priorities. I think it’s important to recognize the other side of your point. There probably are not enough resources left in the world to build a solar panel for every house in America.

    005: I have a very similar feeling.

  • mondobeyondo

    Quantitative easing (which is causing inflation) is absolutely killing our currency.

    Gas is currently $4.00 a gallon here. A dime will still buy you a dollar of gas, as long as it’s a pre-1965 silver dime. Its value is close to $4.00.

    A sparkly new 2011 dime will buy… 10 cents.

    Meanwhile, back at the ranch, umm Capitol Hill, the Republicans and Democrats squabble over some $61 billion to cut. A mere drop in the water compared to our $14 trillion plus debt. How asinine can people get?

    The only thing the circus in Washington is missing, is P.T. Barnum as ringmaster. There truly is a sucker born every minute. And maybe some one trick ponies (maybe even 2 or 3 trick ponies!!) We already have way too many elephants and donkeys.

  • mondobeyondo

    Oooooh, I get it now. The President, Congress, and IRS operate under different rules than the rest of us.

    If there is a government shutdown, why in heaven’s name will the Prez and Congress continue to get paid – but our armed forces fighting (now) three wars, won’t receive any pay? Obama and Congress work for Us, The People! (Or do they? Hmmmm.) We hired all of them – at the voting booth! They are public employees. If the federal government shuts down, they should ALL work without pay, just like every other federal employee. Why are they so special? Furlough them all, until they stop their bickering and get something together!

    And the IRS won’t send you your refund check in the mail if the gov’t shuts down. But if you have to pay the IRS – you’re still expected to pay them on time?!? They won’t even provide for a “government shutdown exemption” clause?? The system is so unfair.

  • Keith

    Listen to George Soros as he explains how the Elite plan to run down the dollar and promote the Chinese yuan as the world reserve currency.

    http://www.youtube.com/watch?v=QXx6cfOb_Kw

  • Gwynmarilyn

    buy sliver if you have extra cash. You always can find a few dimes and quarters for sale at the coin shops. Wont mean a lot but a few sliver coins are better then none when dollar falls. But food and supplies one need to live make the most sense for everyone. With the cost of everything going up in the stores.

  • Otown Right Guy

    Those of us long gold, silver and oil are not worried. Of course we listened to people like Ron Paul and the Mogambo Guru and saw this coming. We won’t get “rich” but we will have some of our wealth preserved. Those of you long T-bills and other central bank “backed” paper that you bought for “stability” and a flight to “safety”…you have my condolences!

  • The Unicorn

    We are also reaching peak Phosporus this could make peak oil look like a walk in the park.There is no replacement!Oil can be replaced by a number of different energy sources.When the Phosporus is gone the cost to recycle P would send food prices sky high.

  • http://YAHOO RICHARD

    GOLD AND SILVER AND OIL ARE GOOD. BUT YOU CAN’T EAT IT. GROW A GARDEN STOCK UP THE PANTRY AND HAVE PLENTY OF WATER AND OF COURSE DON’T FORGET TO GET SOME GUNS AND PLENTY OF AMMO.

  • dan17

    gold and silver are up so it means that prices for the basic needs are getting higher. does the bailout have something to do with that? do 700 billion have to be recuperated? for me the biggest problem is the gm foods that are allowed to exist. if we lose the right to keep seeds because monsanto or dupont have the right to our foods we are really doomed and gold won’t save us.

  • timo44

    I want to thank you so so much for the great information you continue to write about. I’m trying to warm my family in friends and I’m always posting on facebook the articles you wrong. But as I see things are getting wost and worst and I do hope people listen and learn from people like you trying to help use. I can’t thank you enough for explaining things words that are not teach in our schools or that sorry tv that I don’t even watch much no more.

    • Michael

      Timo44:

      You have no idea how much it helps when people like you post the articles to Facebook. I try to write these articles so that they will be easy to understand. One of my hopes is that they will be shared with as many people as possible. When people like you share them on Facebook and Twitter they get in front of the eyes of more people and hopefully that means that more people will wake up.

      Michael

  • timo44

    I want to thank you so so much for the great information you continue to write about. I’m trying to warm my family in friends and I’m always posting on Facebook the articles you wright. But as I see things are getting wost and worst and I do hope people listen and learn from people like you trying to help use. I can’t thank you enough for explaining things words that are not teach in our schools or that sorry tv that I don’t even watch much no more.

  • El Pollo de Oro

    If you think things are bad in The Banana Republic of America (BRA) now, just wait–when the U.S. dollar (or rather, BRA dollar) goes into cardiac arrest, that’s when the you-know-what is REALLY going to hit the fan. Americans who are already struggling and barely making ends meet will be even worse off. Life will only get worse and worse in this Third World horror movie called The Banana Republic of America.

  • Mike M

    When we read about the possible collapse of entire financial systems e.g. EU or the US system. I wonder where the money men who are behind bailouts hold their funds. Do they have some crisis proof vault? How do they stay outside the system and stay liquid?

  • http://www.pathtoasia.com rhea

    I recognize that gold has been a store of value for a long time, and it becomes especially valuable when money is debased. There’ll be a long battle of commodities…

    We help Americans find jobs and prosperity in Asia. Visit http://www.pathtoasia.com/jobs1/ for details.

  • http://alienperfume.net Alien Perfume

    I am buying silver rings, coins, bracelets, etc. as a hedge.

  • morpheus

    That’s right, it is a sign we are moving towards collapse. What do we expect in this country. The rest of the world cannot afford to pay our bills. We use 25 percent of the planets resources. This is coming to an end. And it’s going to hurt when you can’t get cheap credit and you are reduced to getting only 5 – 10 percent of the planets resources. We only have one choice.

    Wake up America. It’ time…

    “THE REVOLUTION HAS STARTED”
    Read “Common Sense 3.1” at ( http://www.revolu­tion2.osix­s.org )

    “Spread the News”

  • http://zeitgeistmelbourne.com Zeitgeist Melbourne

    Wish I had got into silver sooner… but is it still worth investing in? What chance is there of it dropping back down below $40 in the medium-long term?

  • oldphart

    So, who paid who for this article…you or Pravda?

    http://english.pravda.ru/business/finance/08-04-2011/117509-gold_silver_oil-1/

    • Michael

      I allow Pravda (and a whole bunch of other sites) to republish my articles for free.

      Why?

      Because it gets the truth in front of the eyes of more people.

      I could never reach the millions in Russia that they do on my own.

  • http://checkgoldprice.com goldp Prices TodaY

    Great Blog. Tons of great Info. will be back for more.

    Thanks
    Don

    http://Checkgoldprice.com

  • Brandon

    Thank you for the insite on the value of our currency. However when and if the economies of the world do crumble is gold and silver even going to be worth anything. Would gold still be considered the “gold standard” for whatever currency that could potentaly replace the dollar.

  • mack

    Hi friends..

    You guys can get help from the below link about Gold prices..

    http://goldprice.org/

  • gold investment

    The severe fluctuation in various commodities in the stock market is always a reason of trouble for the investors. In order to seek a safe investment people are converting to “global currencies” such as gold, silver and oil.

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