It’s amusing to me that we live in such times of deception where people try to deny blatant truths. It’s just amazing that the government can claim our economy is out of recession when unemployment has risen this year from 8.8% to 9.2% and housing has double dipped. Coming out of recessions, we are supposed to be experiencing explosive growth; not average growth, not below-average growth, but explosive growth. If our GDP grows 1.8% because we increased spending by 10%, that’s not reason for celebration. If entitlements are a problem, isn’t it braindead for Obama to add another huge entitlement on top of them all? This is a level of stupidity at the top that you’ll have a hard time finding an equal to in history.
Before our economy started deteriorating at an accelerating pace in 2008, it was commonplace for people to attack the messenger and not the message of gloom and doom they were bringing. This is standard practice for people who don’t know what the hell they are talking about. Now people are starting to open up because, well, the government has been consistently wrong. Remember “cash for clunkers”? Remember the homebuyer tax credit that was supposed to revive housing? Remember the stimulus program of 2009 that was supposed to bring the unemployment rate down to 6.5% by now? Americans are finally starting to lose confidence in the government, and it’s bound to get worse. Watch out because volatility will rise to new heights.
Without QE3, gold was supposed to collapse like a rock. Well chalk up another incorrect call for the gold permabears because it hasn’t. As I always say, this is about confidence, not inflation. Gold is the only asset that acts as a global vote of confidence. It is sending us a message loud and clear: confidence around the world is falling and the debt crisis in Europe is going to get worse, then it will come to our shores. The timing of it all is the only question.
The summer months are typically slow for gold, so new record highs are definitely worth keeping an eye on. This could be the beginning of severe volatility in the market that coincides with a monster gold rally. It is going to be very interesting from here on out because this debt crisis is getting harder and harder to hide.