US Debt and the Gold Price: Numbers On the Up and Up

As we sat down to write this morning, the cell phone began vibrating against the desk. Alice Gomstyn from wanted to know what we thought about the national debt crossing the $13 trillion threshold.

Uh…the same as we thought about it crossing $12 trillion less than six months ago. Not good. (You can read the story here.) But what do we know. We’ve been whistling Dixie on this subject for the better part of our adult lifetime. No one really cares except when these psychological boundaries are crossed…tomorrow it’ll be business as usual.

For what it’s worth, the US Treasury’s official reading still puts it at $12,989,095,409,531.09 this morning. It appears to update once a day., on the other hand, clocks the debt in real time. According to that site, the US government already owes in excess of a billion more than $13 trillion.

If you’ve got time today for a few scintillating seconds of financial terror, click here and watch the amount each US citizen is on the hook for rise.

We couldn’t help but chuckle when we read that Moody’s has issued another one of those tut-tut warnings the rating agencies put out from time to time. It goes something like this: “Uncle Sam needs to get his fiscal house in order, or else we might possibly downgrade his AAA debt sometime far in the future.”

Yeah, whatever. For we’ve grown to trust ye so much.

Another number commands our attention this morning, too. Gold has zoomed back past $1,200 again overnight. Past $1,210, in fact. And sits at $1,214 as we write.

The Wall Street Journal is in the midst of a three-part series addressing the question of whether gold is in a bubble. The series includes this highly compelling chart:

Gold Vs. Stock Market Bubbles

The blue line is the NASDAQ starting in 1990. The red line is the S&P homebuilding index starting in 1995. And the gold line is gold starting in 2001.

If history rhymes, as Mark Twain said, gold is on its way to a “phase three” mania over the next two years.

As usual, we’re much more confident about the outcome than the timing. So think of it this way: When magazine covers tell you to buy gold and CNBC is talking up junior miners with nothing more than moose pasture for assets, that’s the time to think about selling.

Addison Wiggin
for The Daily Reckoning