PRECIOUS METALS NOW LOOK BETTER THAN EVER: U.S. Government Debt Surges $450 Billion In August

Not only are the precious metals prices looking better than they have for several years, but the reasons to own them continue to improve as central banks begin to crank up their massive CREDIT CARD DEBT. In just the past month, the U.S. Treasury has increased the outstanding public debt by a whopping $450 billion.

Of course, they are making up for some lost time as they were unable to increase the debt until the Whitehouse, Senate, and Congress passed a bipartisan deal for a two-year postponement of the debt-ceiling on July 22nd.  Thus, the new agreement has kept the U.S. Government from shutting down or defaulting on its debt.

Well, it didn’t take much time after the ink was dry on the new bi-partisan deal that the U.S. Treasury announced plans to issue $814 billion of new debt between July and December.  And, as we can see, $450 billion was already issued in August:

Without this $450 billion in new debt, the entire U.S. Government and economy would have begun to shut down and collapse.  Furthermore, the U.S. Treasury is finding decent demand for this new debt because an increasing amount of Foreign Treasuries and Bonds have a negative interest rate.  So, investors around the world would rather buy U.S. Treasuries and Bonds at a small positive rate than lose money, holding their bonds at negative rates.  Of course, this cozy situation won’t last as the Fed will likely be forced to lower rates back to zero and then into negative territory when the U.S. economy rolls over into a recession.

However, here’s an important question.  How much does $814 billion of new U.S. Treasury debt look like if we compare it to the value of global gold and silver production in 2019? According to S&P Global Market Intelligence (gold) and my estimate (silver), global gold production will reach 110 million oz (Moz) this year, while world silver production will likely fall to 850 Moz:

If we multiply the annual production figure for gold by $1,500 and silver by $18, the total value equals approximately $180 billion:

So, the U.S. Treasury will have issued another $814 billion in debt in within six months versus the $180 billion value of global gold and silver mine supply for 2019.  And, this is only one central bank issuing more debt.  Thus, the more debt that is added to central banks balance sheets, the more interest rates have to fall.

Why?  Well, for starters, the central banks can’t keep the lights or fund the government if the interest expense they are paying on all this debt continues higher.  Which means, the next best option is to get the Bondholders to fund some of the central bank deficits.  This is very bullish for gold and silver going forward because the notion that precious metals don’t provide a RETURN or YIELD becomes meaningless when bondholders are charged an interest to lend governments money.

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DisappearingCulture
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DisappearingCulture

“Don’t Let The CPM Group Feed You A Bag Of Brown Stuff About Silver”

http://investmentresearchdynamics.com/dont-let-the-cpm-group-feed-you-a-bag-of-brown-stuff-about-silver/

OutLookingIn
Guest
OutLookingIn

Excellent link. Denver Dave tells it like it is!
Here’s another link that reinforces Steve’s article.

http://www.silver-phoenix500.com/article/silver-price-forecast-silver-ready-take-out-key-levels

dale
Guest
dale

It definitely reinforces Steve’s work. I love long-term charts. Great fork here – “by breaking down at the red line, then silver will continue in a long bear market. If the current fractal diverge from the 80s fractal by breaking out at the green line, then the bull market will resume with vigor.” I wonder what the odds are now of a long bear market? Likely astronomical, it’s almost funny, almost – like a clown wearing a bomb vest. For all we know, Ag could run to fifty before catching its breath. Thanks for the link.

GrahamB
Guest
GrahamB

I am going to have a closer look later today. At the moment however, my resistance point for silver is around $24.50 based on my long-term chart from 1910. I think it will struggle to get past this price for some months; if it reaches that price.

Short term charts will give you short term possibilities and noise for the day to day news slots. My current view is the #Dow Jones will “BLOW OFF” to around 38,000; at which time the fun will start.

I cop a fair from my mates because of this view, so feel free 😏

dale
Guest
dale

“Do not be bamboozled or scared into selling your physical gold and silver or your mining stocks by charlatans like Jeffrey Christian.” good advice…

dale
Guest
dale

$450 billion in August alone, holy smokes! And I was expecting a correction second week of August, hahaha. We will see pullbacks but it’s clear the Hell bound train has finally left the station. I guess it’s time to light a candle and bow to the Rubicon crossed.

GrahamB
Guest
GrahamB

The #Dow Jones has been in a consolidation range between 22500 and 27500 now since December 2017. What’s that, a touch over 18 Months? If the DOW breaks the 27500 level it is on its way to 38,000. If the DOW breaks the 22500 level; silver will BOLT.

My long term level for silver is a modest $350.00.🤑

hoho
Guest
hoho

350 silver……. you’re my man bro

ActionT
Guest
ActionT

Hi.

I am curious as to what you consider long term (for your $350/oz. prediction)? Thanks much!

JR

GrahamB
Guest
GrahamB

In the last 100 years silver has had two extreme highs, 1980 and 2011. It took 9 years (1971 to 1980) for silver on this occasion to rise some 3000%. On the second occasion it took 20 years (1991 to 2011) to rise some 1500%.

If we look at the current trend from the low in 2015; an increase of some 2000% will put silver at $300.00.

$3000.00 would be 20,000% and
$30,000.00 would be 200,000%

I’ll put my money on the $300.00 (2000%) over the next 3 years not the $3000.00 or the $30,000.00.

james r
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james r

Not very prudent to project the past to the present. Do you have any idea what is coming? Have you not read or comprehend Steve’s past articles on EROI?

GrahamB
Guest
GrahamB

My comment is just expressing a view (or observation) based on a long term chart. Patterns in charts have a habit of repeating themselves. I understand Steve’s views regarding the EROI and would be one of his most ardent supporters.

james r
Guest
james r

If you support EROI then you know that we are in a much worse predicament than we were in the past. And this is one of the reason why silver’s gain is going to be much greater than the past.

ActionT
Guest
ActionT

Thanks much for posting your pricing views over time.

Best Wishes,

JR

james r
Guest
james r

I would be quite shocked to see 38,000. The market seems to be holding on to every little word Trump speaks of China Trade.

As for silver reaching $350.00 a bit too modest. My target would be anywhere from $20,000 – $50,000.

CHX13
Guest
CHX13

My long-term target for silver is a 4:1 gold/silver ratio (in an overshooting PM bull market that is a pure cash market; that is after the CONeX and LBMA paper ponzi suppression games are but a memory); no dollar/fiat price attached (but should gold go to some crazy numbers like 40k, well you know my ultimate silver target now… 😉 GLTY&A and a big thanks to Steve for a great site and his sharing of his insights and analyses.

4 oz
Guest
4 oz

Silver still up nicely. Who wouldn’t have been happy when the week began with a weekly close at $18???
It’s been a nice week….if ya ask me. There is something I like about paying $1.68 more for ASE this week vs last week…..

dale
Guest
dale

FED Buying Treasuries
https://www.zerohedge.com/markets/second-week-row-fed-buys-treasuries-qe4

…for yet another perspective of this nightmare. The sky appears to be getting closer.

OutLookingIn
Guest
OutLookingIn

Another round of “stealthY” QE

ActionT
Guest
ActionT

“Silver technically joins gold in a new bull market”

https://www.kitco.com/commentaries/2019-08-30/Silver-technically-joins-gold-in-a-new-bull-market.html

I enjoyed the author’s article – although I believe his price estimates (for Silver) to be very conservative. Regardless, I found it to be a good read.

JR

Rodster
Guest
Rodster

“Oil and Gas Bankruptcies Grow as Investors Lose Appetite for Shale”

Smaller drillers, which account for sizable part of U.S. oil production, are struggling to pay off hefty debt burdens

https://www.wsj.com/articles/oil-and-gas-bankruptcies-grow-as-investors-lose-appetite-for-shale-11567157401?mod=hp_lead_pos4

Stephan Vogt
Guest
Stephan Vogt

How to proceed economically.analysis for Europe(germany). At the moment the banks in Germany in particular do not earn any more money.due to the low interest rate policy the business model is getting weaker.it is only a question of time until there is no more equity capital, then the banks will not be able to grant any more loans.the recession will come.due to the lack of lending the whole zombie companies and also healthy companies will go bankrupt.Especially because of the cheap money many bad companies have been kept alive and the collapse will come if you don’t recapitalize the banks… Read more »

CHX13
Guest
CHX13

Let me put $ 0.45 trillion into perspective. That’s 450 000 000 000 dollars. The amount is equivalent to

296 000 000 ounces of gold or
9 200 metric tons of physical gold at current prices.

OR

24 500 000 000 ounces of fizz silver (ca. 30 years of global Ag mine supply at the current rate) or
760 000 metric tons of silver (roughly the total amount off fizz Ag there is above ground worldwide)

US government debt added in less than one month. Let that sink in. Good luck “king (FUBA) dollaR”.

Stephan Vogt
Guest
Stephan Vogt

At next i think they will try the way the japanese where going.Buying bonds,buying bonds,…

Later then the central banks by stocks and bonds from companys.They already did it.

OutLookingIn
Guest
OutLookingIn

Average Weekly Closing Price.

Gold: Silver:
May 1290.88 14.65
Jun 1375.06 15.20
Jul 1415.47 15.75
Aug 1516.55 17.55

How about that trend?

ActionT
Guest
ActionT

Silver closed today not only closed above $17.55 to a recent record close at $19.23/oz. This finally shows it’s got legs. Silver is in a bull market and the only fear, the dumping of Silver. Ride it out and you could reap the huge rewards.

The Genie is finally out of the bottle. Right now, TPTB are no longer able to micro-manipulate the PM market – in particular, the price of silver.

Hold on and hang in there. Silver still has legs.

JR

GrahamB
Guest
GrahamB

OutLookinIn …. If you have a look at the weekly chart on GOLD, you will find back on 27/05/19 it GAPPED up $3.00 from $1287 to $1290. Charts generally return to cover those GAPS before pursuing a MAJOR bull trend.

If that is the case we could soon find GOLD back in the not too distant future at the $1280.00 level!

😏😏😏

OutLookingIn
Guest
OutLookingIn

“Charts generally return to cover those GAPS”
BUT – Not always. Old chart GAPS of 90+ days “generally” lapse.

Theravaida
Guest
Theravaida

For institutional buying into ETFs or whatever funds, which one among “Weekly Close” or “Monthly Close” is more important from a technical perspective for algorithms? I would think “monthly” would carry lot of weight over “weekly” esp. over long term, however the reason for asking:

Apparently, if weekly close as of Friday Sept. 6 went above $18.76, that would pierce a long-term weekly trend line going back too many years ago. Do algorithms pay that much attention to weekly closes at all, or really need to wait till end of September to observe monthly close in order to declare sufficient victory?

ActionT
Guest
ActionT

I’m hoping that silver closes at $19.50 today. As I post, silver is currently $19.51. If so, to the moon Alice, to the moon.

JR

ActionT
Guest
ActionT

Well, a $19.57 close price is better than $19.50. I’m a happy guy!

JR