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Posts Tagged ‘national debt’

When and How Gold Will Begin its Bubble

February 1, 2011 Comments off

The bull market in Gold is in its 12th year (globally it began in 1999) but has yet to exhibit any “bubble-like” conditions. In fact, we still see many people referring to this bull market as “the Gold trade,” as if its an aberration that needs to be reversed or corrected. That aside, we know that Gold is under-owned as an asset class. The very well respected BCA Research estimates that globally only 1% is allocated to Gold and that fits with some of the charts that I’ve shown in the past.

Institutional accumulation began in 2009 (e.g. Paulson, Einhorn) and we know that phase lasts at least a few years before a bull market gives birth to a bubble.

Part of the problem for Gold has been the solid performance of other asset classes through most of the Gold bull market. Stocks performed very well from 2003 to 2007 and from 2009-2010. Commodities performed well from 2001-2002 and in the first half of 2008. If stocks are doing well or if commodities such as oil and agriculture are performing well, it detracts from Gold. Gold performs its absolute best when the other asset classes underperform or don’t perform too well.

Let me explain the conditions and setup that will facilitate the birth of a bubble and Gold going mainstream. Read more…

National Debt $200 Trillion Dollars

January 5, 2011 1 comment

Dr. Laurence Kotlikoff economics professor at Boston University, discusses the national debt and unfunded liabilities – Aug. 11, 2010

Using CBO data, Kotlikoff says the real national debt is $202 trillion.

Compare the official deficit numbers for July – $165 billion – with the numbers for all of 2002 – where $165 billion covered the deficit for the entire fiscal year.

Excerpt:

The Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.

‘Unofficial’ Liabilities

Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.

Read the Bloomberg article here…