Before this, it took us 224 years to build the national debt to $6.9 trillion.
The debt explosion of the last 20 years is unsustainable.
And its leading many experts to warn that the US dollar will weaken substantially in the coming years.
I mentioned this term above but what does it mean?
When you see the term weakening when it comes to talking about currency it means people expect the dollar to lose value.
This is horrible.
When a country’s currency loses value it means the country can’t buy as much due to the lower value of the currency. And it also means the country has less economic power.
But this isn’t just bad for governments… Its bad for all of us.
If US dollar crashes as predicted by professor Roach, it will make everything we buy more expensive.
Products, services, food, vacations to foreign countries, everything.
To hedge against this, people buy various hard assets like gold, silver, and now crypto currencies.
For this article we’ll stick to gold only.
The US debt explosion in the last 15 years is why gold prices also exploded.
Because more and more people in the US and worldwide expect people to “lose faith” in the US dollar due to the huge debt loads.
The term losing faith when talking about a currency means people don’t think it will keep its value.
If people lose faith in the currency is price and value go down. And this leads to the bad things above.
So, with gold hitting its highest levels in 8 years and US debt going even more out of control with the coronavirus should you buy gold now?
This depends largely on your long term investment goals but what I usually recommend to people is that if you think the dollar or the entire economic are going to crash to invest 5% to 10% of your portfolio in gold.
Investing this amount in gold hedges you against any kind of major collapse of either the dollar or the economy. While it also leaves room to invest in stocks and businesses.
These have more upside potential because they’re assets like gold. But because they also produce cash flow on top of this.
I’ll write more about this in a future article.
Is the US dollar likely to crash in value at some point due to the ever growing and enormous debt levels?
These debt levels and yearly increases are unsustainable.
But I have no idea when any crash in the dollar will happen.
It could happen later this year if coronavirus cases keep spiking worldwide and the US continues to support America with more debt.
Or it could happen in 30 years.
Or it could never happen in our lifetimes.
No one knows.
But it pays to protect yourself.
Gold is one asset you should look into to protect your investments. Especially with all the craziness going on right now related to the coronavirus that we’ve talked about in some of our recent articles.