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Everybody knows that gold coins offer time proven protection against inflation, but the government keeps insisting that fears of inflation are totally unfounded.

January 17, 2011 – Everybody knows that gold coins offer time proven protection against inflation, but the government keeps insisting that fears of inflation are totally unfounded. Its carefully crafted arguments have benefitted from the surprisingly resilient dollar but it is all smoke and mirrors. "The view of markets is that the U.S. will continue to benefit from the exorbitant privilege linked to the U.S. dollar. But that may change," says Carol Sirou, head of Standard & Poor’s France, in a Wall Street Journal article by Mark Gongloff, Mark Brown and Nathalie Boschat.

Most Americans have seen the debt spiral up close. Poor debt service causes credit ratings to fall, raising interest on the debt, leading to poorer debt service. Etc. Etc. But with all of the attention on Europe’s debt crisis, nobody seems to notice that our country is precariously close to the vortex.

China’s first domestic credit rating agency, Dagong Global Credit Rating Co. downgraded its US rating to A+ from AA due to QE2 last November because “the serious defects in the U.S. economy will lead to long-term recession and fundamentally lower the national solvency . . . The credit crisis is far from over in the United States.” The markets ignored the report, but China is the largest holder of US foreign debt and we just cannot dismiss it out of hand.

Gongloff et al report that now Moody’s and S&P are also warning of impending downgrade in their US ratings unless the government takes action to lower its debt. “The likelihood of a negative outlook over the next two years will increase," according to Sarah Carlson, senior analyst at Moody’s.

It is extremely unlikely that our government can or will do what is necessary to ward off inflation. Our comeuppance is coming – be prepared for it with an investment in gold coins.

Kevin Johnson

Senior Staff Writer – GoldCoin.net

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