The Dollar Is Gonna Be the Last Place You Want to Keep Your Money

Time to Load Up on Precious Metals 

In the movies, the third act is always the same: Ever-increasing stakes that escalate to the point of failure before the hero steps up, takes the reins, and repairs everything that’s falling apart. 

At the end of January, the stakes in America ratcheted higher once again as the tragicomic U.S. story continues to unfold.  

That’s when U.S. debt crossed $30 trillion for the first time ever.  

It’s a monumental number. One we will recover from only after we hit rock-bottom and a hero emerges to turn America around. 

But we’re not there yet. We’re a long way off, actually. Meaning…it’s gonna get darker from here. So, load up on previous metals. 

Despite decades of the “debts and deficits don’t matter” cockamamie that has spilled forth from D.C., the reality is that debts and deficits do matter. A lot.  

If they truly don’t, then that’s even worse. For it says the U.S. dollar has nothing supporting it except an ongoing, mass-delusion that green pieces of paper and linen are worth something only because a desperately overleveraged government insists that’s the case. 

But what happens if the populace changes its mind? 

What happens if the rest of the world changes its mind? 

What happens when cross-border cryptocurrency payments allow foreign nations to transact between themselves without going through the U.S. dollar (which they generally need to do now), thereby radically shrinking demand for greenbacks? 

The impacts are going to destabilize an increasingly unstable country. 

Not saying that’s gonna happen tomorrow. Or this year. Or next year. 

But every extra dollar of debt the government piles on, the closer we approach a painful financial reckoning.  

I think that reckoning happens later this decade, as I’ve been saying for a while. 

Stop and think about what $30 trillion really represents. I mean, the number is so large that it doesn’t really resonate. If you lose $100,000, you understand that amount relative to your own finances. But $30 trillion?  

I’ve used this example before, and I will use it again because it neatly puts $30 trillion into context. If you spend $1 million per day, every day, from the day you’re born to the day you die at 100 years old…you would need to live 822 lifetimes to spend $30 trillion. 

How does Uncle Sam even begin to repay that? 

Thing is, there are two ways to deal with debt: pay it off, or write it off. 

Uncle Sam cannot pay it off. The U.S. economy can’t grow fast enough for government to pay all its annual obligations, plus generate extra revenue to pay down the debt every year. Rather, government overspends every single year, pilling more and more deficits on top of the debt.  

Government certain can’t tax its way out of debt. The tax rates would be so onerous it’d destroy the economy. And that just creates a malevolent cycle of taxing more and more to make up for lost ground as the economy slows more and more. 

Uncle Sam could write off the debt—basically renege on his obligations. Politicians and bureaucrats don’t want to do this because it would destroy the dollar. The buck’s only value is that it represents the full faith and credit of the U.S. government. The moment that faith shatters, the dollar collapses. 

Still, I think some kind of default is likely. It won’t be labeled a default; the government will come up with a catchy euphemism to explain why the dollar has to be severely devalued. We’ll probably see it tied in some fashion to gold, maybe even bitcoin. 

Whatever the case, make sure you have exposure to gold in your portfolio—physical gold or an ETF that actually owns so-called “allocated” gold held in an audited vault. Or indeed, an ETF tied to gold miners, as we own in the Global Intelligence Portfolio. 

When the reckoning comes—and it is on the way—the dollar is gonna be the last place you want your money.