Here's a quick bit of news for everyone. A recent report has Warren Buffett predicting a meltdown in municipal bonds. Already, Buffett has begun divesting his Berkshire Hathaway fund of these bond holdings. In the report he goes on to say the severity of the defaults will depend on how much the Federal Government is willing to spend on bailouts. Bailouts which would be hard for government to avoid in light of the fact they bailed out banks and the likes of General Motors.If there are no bailouts, many investors will suffer defaults, pensioners will lose their pensions and government jobs will either go away or experience pay cuts. It's that simple. If there are bailouts, that means more fuel for inflation, higher budget deficits and more debt heaped on an already insurmountable pile.If this scenario rings familiar with the current situation in Greece, it's because it is the same hole into which Greece has dug themselves. And, while they are attempting to dig themselves out with the help of the European Community, the IMF and through the IMF the good old USA, they have also resorted to some extreme other measures. To help limp through this time in limbo between insolvency and bailout, the Greek Central Bank has resorted to selling gold. One report exposes Greece's efforts to sell gold reserves at a 40% premium to help make ends meet. Translated into dollar terms, Greece is already selling gold at $1700 US Dollars an ounce. How desperate must the situation be when citizens are willing to buy gold at just about any price? This is a figure that doesn't show up on the gold charts, nor does it show up on the financial news. What do you think would happen if one of your major news programs did a story on the gold price in Greece? All of a sudden everyone would have to own a piece of gold.Now here's something to think about. If everyone in the U.S. bought just one ounce of gold from our strategic reserves of 8000 or so metric tonnes, (32,150 ounces per metric tonne) there wouldn't be enough gold for each person to have just one ounce. To satisfy that demand would take about 9375 tonnes. Is it any wonder the U.S. Mint keeps runnning out of American Eagle Gold Coins? There are people in the world, right now, willing to pay $1700 US dollars to buy 1oz. Gold Coins. Now, if I didn't know better I would say there is a worldwide shortage of physical gold developing. I emphasize physical because it's easy to sell paper gold when there is no need to have physical gold in an amount equal to dollars invested to back up investments. I say shortage because our own U.S. Mint, on at least two occasions, has run out of American Eagle Gold Coins. How does the country with the largest reported gold reserves in the world run out of gold? Right now simple math tells us there isn't enough gold in our own reserves for each citizen to have their own 1oz. Gold Eagle. And, frankly, most people don't want one, at least not yet. So, you might as well own one for them too.
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