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🇺🇸 «Saving America From Default»: the show must go on
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⚠️ No matter what traders say on the news, all markets love stability. US Congress has not yet managed to agree on raising the limit, and the US national debt has already reached a critical value of $31.4 trillion. Is default inevitable? Is the debt market heading for the crisis of the century? Nothing like this!
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The probability of a real default is minimal. Since 1960, the US government has raised the debt ceiling 78 times. Raise, of course, again − the US Treasury has long developed a backup plan of action.
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Emergency measures to limit the public debt began to operate as early as last Thursday, Janet Yellen promises that special accounting manoeuvres should avert the crisis before the start of the summer. The issue of debt securities has been suspended from January 19 to June 5.
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The plan provides for the use of regular contributions to pension and social funds serving federal employees to make government payments. It will also be necessary to cut spending, but exactly which budget items will be adjusted to save the country from default, Democrats and Republicans will decide during aggressive discussions in Congress.
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If the US Congress still allows a default on its debt obligations, then (in theory!) the Fed can intervene and buy back part of the Treasury bonds. But such tough decisions are unlikely.
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How effective would such «emergency measures» be? Even Janet Yellen cannot answer this question, although she has experience in leading the country out of technical default.
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So far, gold remains the main beneficiary of the US government's debt situation. The longer American officials fight each other the more gold assets will grow. So, in addition to the usual spot gold, we recommend paying attention to the shares of Barrick Gold (NYSE: GOLD), Newmont Goldcorp (NYSE: NEM), Kinross Gold (NYSE: KGC),
B2Gold (NYSE: BTG).
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Profits to y’all!