It was a new Millennium, it was also the last year the Federal Budget showed a surplus, excluding social security spending. These were good but crazy economic times. The Dollar was strong, the Dot.com bubble was bursting, we were at peace, and the US debt was a third of its current amount. Gold & silver languished in a prolonged slump at $249 & 5.00 respectively.
Over a decade later the US Debt has tripled its levels in 2000 & we have hit the Debt ceiling level of $14.3 Trillion as set by Congress. The Debt/housing bubbles have burst and the US is mired in 2 theaters in the War on Terror. Gold & silver are $1510 & $35.00 respectively. The US Debt is at a level that many consider a tipping point. The US bailed out many banks that were too big to fail, propping up the financial sectors with two rounds of Quantitative Easing. There is mixed indications of a 3rd round starting in July.
All of this has the global financial communities looking to Gold & silver as safe-havens against US Treasury Bonds. They collectively wait to see if there will be any fiscal house cleaning done by this current Congress & the Fed. Many experts are not optimistic thinking nothing will be done so close to the 2012 election. Ousmène Jacques Mandeng from Ashmore Investment Management was reported on CNBC, With more no change in borrowing expected until after next years election, we believes foreign central banks are likely to decide to keep buying US debt while attempting to recalibrate their exposure.
This should continue to pressure the metals markets over the next short to medium term. Many will do as China did earlier this year, match their positions in US Debt with strong positions in gold. The financial markets are watching and taking into careful consideration their continued investment in the US. With all the turmoil surrounding the US Debt & economic policies the US may find themselves ,no matter how big we are, failing.
Read further: CNBC – US Debt Cannot Defy Fundamentals for Ever