It is impossible to understate the threat of hyperinflation and the urgent need to take shelter in gold coin investments.

April 06, 2011 – It is impossible to understate the threat of hyperinflation and the urgent need to take shelter in gold coin investments. The National Inflation Association (NIA), which has been tracking the steady progression of events leading to hyperinflation, warns us that “Americans who wait until 2013 to prepare, will most likely see the majority of their purchasing power wiped out.”

The warning signs are all around us. Our deficit for this year is projected to be 43% of total expenditures — precisely the same as Brazil’s when hyperinflation hit them in 1993 and higher than Bolivia’s when they were struck in 1985. No proposed budget cuts would significantly change that figure.

The politicians don’t want us to see things that way. Obama’s recently created National Commission on Fiscal Responsibility and Reform has been charged with finding ways to balance the budget by 2015. But that is just another pacifier for us to suck on. To give the commission any chance whatsoever of achieving its mission, Obama has redefined the deficit to exclude interest payments on the debt.

Long-term bond yields will spike any time soon and eventually the Fed will be forced to raise the funds rate to try to bring inflation under control. As foreign central banks dump U.S. treasuries and the Federal Reserve mops them up, the rising rates will directly fuel inflation here. By 2015 it is probable that the interest on our debt will reach $1 trillion. Consequently, interest as a percentage of tax receipts would rise from 9% today to between 30% and 40%. No country has ever averted hyperinflation when interest payments reached 40% of tax revenue.

One very telling indicator is the Dow/gold ratio – the amount of gold required to buy the Dow. Since the end of the last century that ratio has dropped from 42 to about 9, a nearly 80% decline in value because the equity market is responding to a flood of equity and not the fundamentals. According to Fred’s Intelligent Bear Site “we are witnessing the end of an era for equities … and gold has proven to be the next great asset class.”

We are all well advised to follow the NIA’s advice and prepare ourselves today. Buying gold coins is the easiest and most secure way to start.

Kevin Johnson

Senior Staff Writer – GoldCoin.net