Headline - U.S. Downgraded loses AAA+ Status.
What a wild wek we had in themarkets. First the debt ceiling gets raised. Then the rush of money out of Dollars and Euro markets and into safe haven Gold & Yen.
Gold ran up to 1681 and our options went into huge profit. Gold ended up 2% for the week.
We also placed a short position in bonds as they were hitting a seasonal resistance level and the Short Bond investment vehicle is at an all time historical low. I expect this to be a very profitable position we entered yesterday just before the US got downgraded for the first time in history.
What does a ratings downgrade do to bonds ?
Short term we never know as there is so much interference in the markets. Over the coming months though people will start to ask if the US is getting downgraded are bonds reallythe safe option. If the US can't pay it's bills and has to raise it's debt ceiling;the equivalent of an indebted shopaholic getting a few more credit cards who's to say it will make good on it's payments to it's bondholders.
There was so much money flocking out of the dollar that the Japanese Government had to intervene on Thursday to bring the Yen back down. It looks like they will have to intervene again on Monday.
So it continues the US & Europe are intervening to put liquidity into their currencies to keep them afloat and theAsian countries such as Japan & China are intervening to sell their currencies so that their exports can remain competitive in the US & European markets. Everything comes into balance again. It's a race to the bottom for all the global currencies.
No wonder the chinese keep advising their citizens not to hold money in Renmimbi rather they advise them to buy Gold & Silver.
Gold & Silver are the only currencies that can be ever be allowed to rise over time as they have no sovereignty. They are independent of all Governments & banks. While there is interference and we will certainly see more all interference to bring theprice down will be temporary.
To save the US Dollar the U.S. have:
1-Huge short contracts on Gold & Silver
2-Raised margin requirements for Silver and will possibly do the same to Gold.
3-Banned U.S. citizens from owning OTC derivatives in Gold & Silver.
The Chinese over the same period:
1-Opened 2 new Metals Exchanges HKMEx & Pan Asian Gold Exchange.
2-Relaxed rules on Gold & Silver ownership to allow individuals buy Gold
3-Ran adds advising people to buy Silver when it was $17 an ounce.
4-Opened Gold & Silver shops for public
5-Sell Gold & Silver in local banks.
The next step in the US will be to raisethe Comex requirements for Gold and finally to make it illegal for US citizens to own Gold & Silver. We provide storage in the Freeport of Singapore Airport in high security vaults for anyone looking for safe secure private storage.
Once the US Government bans all theGold from it's citizens (They will likely pay market price as they would if they needed your house). However they can print as much dollars as is needed to buy your Gold and your dollars will be worth a lot less than the Gold. Asthe dollar goes down in value the U.S.
governments ability to pay off their debt with Gold gets easier and easier.
When Gold reaches 12,500 an ounce. These are Martin Armstrong, Alf Fields & jim Sinclairs figures not mine it will take a lot less Gold to pay off their debt. That's the only way out of thedebt problem for the US.
The US economy will limp along untilthe next election and Obama will get back in. Selling Change - More talk. Once he gets in the dollar will go into freefall. Gold will be repossessed. Thenew currency will be tied to Gold & in or around 2016 when oil prices are at $300 a barrel the US will uncover thelargest untapped oil reserves in Texas and the rest of the southern states.
Just remember you heard it here first.
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