On August 2nd, the United States current allotment of lending ability to fund itsoperations will be reached. It will then need to make immediate spending cuts. They wouldn’t even be allowed to borrowed from the Federal Reserve, which can print dollars and sell them to the Treasury for bonds, because they wouldn’t be allowed to borrow money from anyone, period. Why it’s called a debt ceiling, and not a debt squooshy thing that is flexible. When the Fed does buys bonds, this is called “monetary dilution” and erodes the underlying value of the dollar. China, Japan, and private investors of course make up a percentage of this, and is the true “market demand for US Debt”. The Federal Reserve is filling a need by the amount they lend. This is dilutive to the value of the dollar. It’s the Fed borrowing aspect of the continuingfunding of running a deficit that is the true criminal in our dollar erosion and loss os spending power, which has sent gold and silver to record highs this year. That is how you know what is really going on.
What is gold doing? Why is oil lagging? Because oil is not a reflection of monetary responsiblity directly, gold is. Oil goes up if the amount of dollars in the system increase, not if the “perception of the value” of the dollar changes. That would reflect more in the gold/silver aspect of the commodity family. Not saying the price of oil in dollars isn’t sensitive to all aspects of the underlying currency it is being brought to market in, but there are many other affects on the price of oil outside of simple monetary policy. Whereas gold and silver, as a representation of real money, is a much better indicator.
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