With a public debt of nearly $19 trillion, the U.S. debt to GDP ratio now stands at an incredible 105%, a ratio not seen since the aftermath of World War Two. Back then, the post-war economic boom meant U.S. debt fell beneath 40% by 1980, a low that’s been steadily climbing ever since. The difference is, the U.S. has reached this dangerous debt ratio with an economy that doesn’t look anything like it did in the 1940s and the country’s prospects for diffusing that debt bomb are grim.
There are also no signs that U.S. public debt is going to go down any time soon. In fact, the massive tax cuts just introduced by the Trump administration mean that the annual public deficit is going to reach $1 trillion in only a couple of years.
The U.S. debt bomb is going to off one way or another and there are only two ways the country will be able to deal with it. The first is raising taxes significantly and reducing public services, an austerity measure that could reduce public debt but would be politically impossible. The second and much more likely scenario is the U.S. printing money to pay back its debt, a monetary policy that would send inflation skyrocketing.
That’s why ballooning debt sets off investors’ “fear factor,” a concern that the value of their money is in jeopardy. Hyperinflation is a legitimate concern when debt exceeds a country’s annual wealth production and inflation concerns send investors flocking toward silver and gold. Hedging against inflation is the best way to invest in silver and gold to preserve your wealth.
Silver and gold are inflation-proof commodities. Gold and silver prices compared to other assets vary, but in the long-term (think retirement or even your legacy), they come out equal or ahead of inflation. That mindset is an effective, conservative approach to investing. If you’re worried about wealth preservation, consider buying RRSP gold through Silver Gold Bull, one of only a few online gold dealers that facilitate buying tax-advantaged gold. Thanks to new rules, you can now make physical gold bullion part of your RRSP, which means you can save money on your tax bill now when you buy gold and wait to pay taxes on your returns when you retire. When you retire, the dollar will be worth a fraction of what it is today, while gold will have gained. Check out Silver Gold Bull or any gold dealer that offers RRSP gold.
But wealth preservation is only one side of the story when it comes to an impending debt bomb. Unprecedented American debt means that gold could be entering into its third great bull run, a theory promoted by James Rickards of Strategic Intelligence. In a commodities super-cycle, gold bull runs can last for a decade and the current gold market is only at the beginning of one. At the end of these bull runs, the value of gold and silver typically falls and stabilizes somewhere considerably higher than their prices beforehand. With the right timing, gold and silver investors can walk away with huge profits. Keep an eye on gold prices and work with a gold dealer like Silver Gold Bull that does two-way trading fast. For investors who are paying attention, the debt bomb can be an opportunity. Don’t lose your savings to hyperinflation caused by reckless government spending. Shore up your wealth and maybe even profit along the way.