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The government spends more money than it is receiving in taxes, which forces it to borrow. As these deficits grow, they eventually exceed the market’s capacity or willingness to lend money to the government.

December 19, 2009 – Socialism has come to mean many different things to many people, but regardless how it is defined, in the months immediately ahead it will be put to a rigorous test.  The test will be visible to everyone as countries around the globe run out of money and confront overwhelming debts thatRead more

December 16, 2009 – One of the best explanations of fractional reserves comes from a polemical essay written in 1995 by Murray Rothbard, one of the prominent champions of the Austrian School of Economics: “Banks make money by literally creating money out of thin air, nowadays exclusively deposits rather than bank notes. This sort ofRead more

December 13, 2009 – In my last commentary I asked “What’s next for gold?”  Answering my own question, I noted that “$1200-$1400 is a reasonable target for the end of this year, but first, it seems likely that gold will re-test support.” In fact, gold kept climbing to above $1200, so my timing was off.  OnlyRead more

December 6, 2009 – I have not commented on the stocks of gold and silver mining companies since August 22nd because there hasn’t been much to say, but that has changed.  As expected, the XAU Index of mining stocks eventually broke through “resistance around the 152-154 area” and kept climbing.  However, I am now gettingRead more

While the debate continues whether inflation or deflation will be the dollar’s eventual fate, the Federal Reserve is pursuing a pernicious policy that is insidiously debasing the dollar. This policy has generally been met with indifference, if it has even been noticed at all.

November 28, 2009 – In my last commentary about gold on October 25, I noted that “gold is a much different market over $1000 because of all the new players being attracted to gold.”  Since then we have seen a good example of what I meant.  Gold has rocketed higher, as is clear on theRead more

November 23, 2009 – Bull markets are marked by three distinct stages, and when gold climbed above $1,000, it only entered its second stage.  In other words, gold has much further to climb in the months and years ahead. So don’t be misled by what you may hear or read in the mainstream media and even muchRead more

The Labor Department on Friday reported that headline unemployment in the United States has now climbed to 10.2%, a 26-year high. I use the word “headline” purposefully because the true unemployment rate is much higher.

From its 74.97 low in mid-October, the US Dollar Index has bounced 1.8%. Occasional swings of a percentage point or two are to be expected, as markets never move in a straight line. So this latest bounce is not significant and in fact is hardly noticeable on the following chart.