James Turk continues:

“The 800-pound gorilla in the room is the US government's horrendous deficits and addiction to debt.  The Fed is keeping interest rates low to sustain the illusion that the US government is solvent, while hoping that low rates will also jump-start the US economy and thereby increase federal tax revenue to service the mountain of debt.  

But despite all of the money printing by the Fed from buying government paper, the economy remains in the doldrums, so the US government's financial position is becoming increasingly precarious....

Continue reading the James Turk interview below...


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“That's why the US lost its triple-A status.  We should expect another downgrade soon, just like is happening with the serial downgrades in Europe.  

This brings up an interesting point -- even though Europe is getting most of the attention of late, the sovereign debt crisis is global, Eric.  Just like the spendthrift kings of old, all of the sovereigns today are spending money they don't have, and financing their largesse by debasing the currency.  

That is what quantitative easing is all about.  Keeping interest rates low is debasing the dollar, but there are also other bad outcomes from this misguided policy.  Low interest rates are killing middle-class savers, and doing nothing to improve the economy.   

The Fed's interventions to keep interest rates abnormally low are making the US government's borrowing costs artificially below what they should be.  This tactic is keeping the federal government’s deficit from being even worse.  Just a 1% rise in its borrowing costs, on the $16 trillion of debt, would deepen the deficit by $160 billion.  The so-called fiscal cliff is really a ‘currency cliff,’ and the US dollar is headed straight for it.”

When asked about gold and silver, Turk responded, “A huge base is now in place for gold and silver at $1600 and $27.  We just need a spark to get a rocket launch in precious metal prices.   It would be an upside explosion from here, meaning that this bull market would be taking along with it as few people as possible, which I always see as a key characteristic as to how bull markets work.  

An upside explosion would mean a lot of the money that is now on the sidelines would remain on the sidelines because there would be little opportunity to buy on pullbacks, which is what I mean by an explosion.  The market will relentlessly keep going higher.  We have probably missed the last chance to buy gold at $1580 and silver under $27.  So KWN readers need to get ready for the big summer rally I have been expecting.”

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The interviews with John Hathaway, legendary Art Cashin ($612 billion UBS), Gerald Celente, Don Coxe ($538 billion BMO) and Eric Sprott are available now.  Also, be sure to listen to this week’s line-up of other KWN interviews which include MEP Nigel Farage, Peter Schiff, and John Embry by CLICKING HERE.

Eric King

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rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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