By John Fisher
April 12, 2010
The U.S. government produced the largest monthly deficit in history last month at $220.9 billion. That’s 14% higher than the previous record set in February 2009. And the deficit through the first five months of this budget year totals $651.6 billion, 10.5% higher than a year ago.
The Obama administration projects the 2010 deficit will hit an all-time high of between $1.56 and $1.71 trillion, besting last year’s $1.4 trillion. Consider that we have had no major bailouts this year, but the Fed is still spending increasing amounts of money it doesn’t have.
The Treasury is issuing bonds to service our debt and doesn’t have enough buyers, except the Federal Reserve (read quantitative easing). Time to start thinking about inflation…
Action to Take: Don’t get caught like a deer in the headlights with increasing prices. Do exactly as I do – buy consistently over time in modest amounts. The effects of geopolitical events, domestic politics, central bank buying, commodity exchange manipulation and general investor emotion make it impossible to time the market.
If you do not have at least 10% of your assets in physical gold and silver bullion, you should think seriously about doing so now. Otherwise, you are relying on Washington, DC and Wall Street to have your back. You may wish to consider hedging your bet.
What to Buy: With the Gold:Silver Ratio standing at 63.5 ounces of silver to a ounce of gold, you should purchase silver over gold on a 2 to 1 basis. We will look to swap silver to gold at the time when the Gold:Silver ratio drops to 48:1.
Accumulate 90% pre-1965 silver coin and 10 and 100 oz. silver bars. These articles carry the lowest premium. In gold, look into U.S. Arts Medallions, Austrian 100 Coronas and British Sovereigns. Always remember: All premiums disappear as metals prices rise.
