Gold weathers brewing global economics storm - Juels Limited News Article

Gold weathers brewing global economics storm

I have written many times in the past about the soaring gold market with solid investment opportunities and the current high prices for selling scrap gold. By the time this column is published, President Joe Biden and the current speaker of the United States House of Representatives, Kevin McCarthy, may have concluded their negotiations to put in place a ceiling cap for borrowing for the US government.

Once a deal has been approved in principle, the bill will be presented to both Houses of Congress – the House of Representatives and the Senate.

If favourably voted for and approved before the July 5 deadline the USA will not default on their scheduled repayment obligation. However, the next instalment is due again in January 2024.

In May, the US treasury secretary Janet Yellen warned that: ‘America is simply on the verge of bankruptcy’ if the borrowing ceiling cap was not raised by June. The current level of national debt is $31.4 trillion and the Congressional Budget Office projects that interest payments alone will total $663 billion in this fiscal year, increasing to more than $10 trillion by the end of the decade.

But what does this mean on a global scale?

The national debt owed by the USA is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time. In any given fiscal year, when spending (benefits, federal wages, budgets for new facilities, etc) exceeds the yearly revenue (government income from taxes) it results in a negative or budget deficit.

To pay for this deficit, the federal government borrows money by selling marketable securities such as treasury bonds, bills, notes, floating rate notes, and treasury inflation-protected securities.

The national debt is the accumulation of this borrowing, along with associated interest owed to the investors who purchased these securities. As the federal government experiences reoccurring deficits, which is common, the national debt grows.

Simply put, the national debt is similar to a person using a credit card for purchases and not paying off the full balance each month. The cost of purchases exceeding the amount paid off represents a deficit, while accumulated deficits over time represents a person’s overall debt. Which can, eventually, lead to bankruptcy.

The effects could be catastrophic. It is predicted that if the USA defaults with a payment, millions of jobs will be immediately affected – and that in turn could collapse the US economy. And the global knock-on effect could plunge the economy of every western country into free fall.

As global tensions rise, confidence in government falters and there is instability in the stock market, gold tends to outperform other investments. We can source gold bullion investments to suit every budget.

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