For the first time since 1917, S&P has reduced the US credit rating from AAA to AA+.
The full implications of this change remain to be seen. But one fairly clear outcome is that many foreign investors will no longer view the US and the UD dollar as the ultimate safe haven for their investments.
If the US dollar is no longer the most reliable safe haven, what is?
Well, we can’t turn to Europe, because they arguably have even bigger problems than the US. And we can’t turn to China, because they are struggling with rising inflation.
In fact, none of the world’s fiat currencies are suitable as alternatives to the US dollar.
Which brings us to gold. Solid, reliable gold.
The thing about gold is that it doesn’t rely on credit ratings. Its value isn’t determined by debt ceilings, or political wrangling in Washington. Gold is and always has been a unique store of wealth.
Visit a few museums and you’ll see the gold owned and worn by kings, queens, princes and emperors from the beginning of history.
Gold is the ultimate symbol of wealth and power.
Why? Because of its scarcity. There isn’t much of it, and it’s extremely expensive to get out of the ground.
This is what separates gold from any other kind of money. You can print as many new dollar bills as you like, but you can’t print gold.
Today, you don’t need to be an emperor or a queen to own gold. And that’s good news for us. Because even after thousands of years, gold still represents the ultimate in wealth and power.
If you own gold, you have the power to protect your wealth, even when paper currencies lose their value.
But let’s go back and look at those foreign investors, nation states included, who are now looking at America’s AA+ credit rating.
What that reduced credit rating means is that investments in the US are no longer viewed as being 100% safe. And that, in turn, means more and more countries will turn to gold as an alternative, triple-A rated investment.
It’s already happening. In recent months, South Korea, Thailand, Russia and Mexico have all been buying gold. And, unlike you and me, these countries buy gold by the ton.
And when gold is being purchased by the ton, that puts upward pressure on the price.
Put simple, a reduced credit rate for the US is going to drive world investors, and countries, to put their money into gold, instead of into the dollar. And that is going to drive the price of gold up even higher.
Your job, right now, is the buy more gold before the shift away from the dollar drives prices above levels few of us have imagined.
Further reading…
What an eye opener. I also find another article of yours enlightening http://www.owninggold.com/blog/2011/09/why-your-investment-advisor-will-bully-you-not-to-buy-gold/