A dire financial condition

Gold bugs know the dire circumstances of the federal government’s financial condition, but now mainstream columnists and talking heads are throwing out statistics that should cause even the most devoted stock investors to consider buying gold or silver:

** $20 trillion national debt, headed to $40 trillion in the next ten years – if not before then.

** More distressing is that these CBO projections are based on no recession, which would result in lower tax revenues and even more deficit spending.  The CBO seems to have bought into the Fed’s promise of perpetual prosperity.

** The national debt now stands at 100% of the nation’s Gross Domestic Product and is projected to reach 135% in 2027 by David Stockman — if the national debt climbs to “only” $35 trillion.  Many countries have seen their credit ratings destroyed long before reaching such high ratios.

** Even before the recent tax cuts and spending bills, interest on the national debt was projected to rise from some $300 billion to more than $800 billion ten years out.  If inflation kicks in, interest rates will skyrocket, thereby increasing the cost of servicing the national debt.

** Numerous studies estimate that unfunded federal liabilities are well north of $100 trillion; some studies say more than $200 trillion.  Where will that money come from when due if not from the Fed’s printing press.

** Older CBO studies show that by 2025 Social Security, Medicare, Medicaid and interest on the national debt will consume all tax revenues.  Spending in other areas, such as defense and welfare, will have to be borrowed.  How long to you think that could go on?

The climate is right for gold and silver.  They remain in long-term secular bull markets, having put in intermediate bottoms in 2015.  And, if the above comes close to reality, there’s a long way to go on the upside for both metals.