In a largely ignored March 2020 report on the nation’s fiscal health, the General Accountability Office acknowledged, “The federal government faces certain fiscal risks that are not fully accounted for in the budget or long-term fiscal projections, and could lead to future spending increases and higher levels of debt.”
Given the current spending trajectory, the defaulting on debt and/or challenges to the U.S. dollar’s safety aren’t out of the question. And at the very least, skyrocketing tax rates to get out of a financial jam is another possibility. Whatever the case, you don’t need to be a goldbug to appreciate the fragility of the government’s finances.
A DataTrek Research blog post concluded, “Our advice on gold as an investment remains unchanged, namely that we always recommend a 3-5% portfolio position.”
Ron DeLegge is founder and chief portfolio strategist at ETFguide, and is the author of “Habits Of The Investing Greats.”