Wisely Choices

From Richard Russell in Dow Theory Letters:

"Now I'll let you in on an awful secret. The US, despite all its BS talk, really wants a lower dollar. The fact is that the US is doing absolutely nothing to defend the dollar.

Of course, if the Fed wanted to defend the dollar they could halt their mass printing of dollars, and they could raise interest rates. And Bernanke could win the 800 meter race at the next Olympics at Rio.

But, let's be rational - how in God's name is the US going to pay off trillions in debt? By raising taxes? Impossible. They could renege on the debt like Argentina - unthinkable. But there is a way - they'll try to minimize the importance of the debt with a cheaper devalued dollar.

That's the time-honored US way, but loyal Americans don't believe it. If they did, gold would be selling at $4,000 an ounce."

Mr. Russell's opinion is certainly supported every day by the actions of the current White House. The Health Plan
proposals, in spite of protestations to the contrary from our leaders will add more than a trillion to the debt. And every day we read about a new proposal which will add billions more. How about the idea to hand out $250 to every senior because their Social Security Pension will not be adjusted upward this year. I believe this will cost some $13 billion.

So where will this all end? We don't know because we don't know when this spending frenzy will stop. One thing I believe, though, is that not only will gold go to unheard of heights, but oil will follow, leading us into an inflationary period like we have never yet experienced.