Rich Dad's Advisors Guide to Investing in Gold and Silver: Everything You Need to Know to Profit from Precious Metals Now by Michael Maloney

Author:Michael Maloney [MALONEY, MICHAEL]
Language: eng
Format: epub
Tags: BUS050020
ISBN: 9780446544641
Publisher: Business Plus
Published: 2008-08-27T16:00:00+00:00

Follow the Yellow Brick Road

SCENARIO #1: MILD INFLATION (THINGS GO ALONG PRETTY MUCH JUST AS THEY ARE)

I believe this is the least likely scenario. There is way too much economic disequilibrium in the world for things to just continue, and even Ben Bernanke agrees: “The large U.S. current account deficit cannot persist indefinitely because the ability of the United States to make debt service payments and the willingness of foreigners to hold U.S. assets in their portfolios are both limited.”

In other words, we buy stuff from everybody else, then everybody buys IOUs in the form of U.S. Treasuries, corporate bonds, mortgage-backed securities, and hard assets such as companies, stock (partial ownership) in companies, real estate, and such. America buys stuff from the rest of the world by selling them pieces of America . . . and it’s a very, very serious problem.

I’ve already shown throughout this book how deep and how wide the U.S. trade imbalance problem is. The reason I believe moderate inflation is the least likely result of these imbalances is because eventually the world will lose confidence in the U.S. dollar. On that day, they will want to cash in on all the U.S. Treasuries they own. Unfortunately, we won’t have the currency to pay up, so will have to print it. Whatever effect this will have on our dollar, and on the world economy, you can bet it won’t be steady-as-she-goes, moderate inflation.

So, out of all the possible scenarios, I believe the status quo is the only scenario that is pretty much impossible. But even if all I’ve just described doesn’t happen, and we go along just as we are, it means the global currency supply will continue its exponential rate of growth, and thus the value (purchasing power) of all currencies will continue to fall. All currencies, that is, except two, the only currencies they can’t print: gold and silver. Currently, those currencies are severely undervalued. Mark my words, gold and silver will catch up, and then some.

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