The past week has seen the price of gold break out above the $2,000 level. The question many have now is whether it will stay there. The yellow metal is down today, but it is still maintaining trade above the $2,000 level. The latest U.S. labor market data in Weekly Jobless Claims today has not done much to move the market. It has caused some concern about the labor market, however, as jobless claims are on the rise.
A softening of U.S. labor data may point toward a recession on the horizon. The term “recession” has been thrown about quite a bit in recent months, but has thus far failed to materialize. If more people are out of work and having trouble finding a new job, the odds of a recession would rise and could climb substantially.
If the chances of a recession do rise, the Federal Reserve may find itself in a tough situation. The Fed has already raised interest rates to nearly 5%. Whether the Fed can keep going, however, is another matter. The higher interest rates are having an effect on the economy and will continue to slow it down further, especially if rates go even higher from current levels. The real issue at hand for gold investors is not how high rates might get, but how costly it becomes to service the nation’s debt.
The $32 trillion and change in national debt is sitting in the stomach of lawmakers like a stack of rich pancakes. Although it has always been easier to kick the can down the road, the time for doing so may be running short. At some point, as the cost to service that debt becomes more unmanageable, the U.S. will be forced to do something. A logical solution for lawmakers could be to debase the dollar or even get rid of it entirely.
A massive currency debasement would not only affect the government and its debt load but would also have a dramatic and negative impact on U.S. households. Should the value of the currency decline from current levels, the value of gold is likely to go higher. Gold could reach over $3,000 in a few short weeks if the dollar begins to seize up.
The gold market is now within striking distance of its previous all-time highs. If the dollar is debased or weakened, gold could rally and see fresh all-time highs within a matter of days. As the cost of U.S. debt rises further, so too will the price of gold in all likelihood. If you do not already own physical gold, now is the time to get started. Building a portfolio of gold has never been easier and can even be done within an IRA account. Get your gold before prices climb further. When the yellow metal hits $5,000 or even $10,000 per ounce, you will be glad you did.