Even the mainstream media cannot ignore it any longer, as they reluctantly reveal news about the imminent collapse of the U.S. dollar. The U.S. dollar index has declined to a 15-month low of 74.77. Meanwhile, gold prices have risen from $925 per ounce to a new all time high recently of $1,119.10 per ounce while silver prices have risen from $14 per ounce to nearly $18 per ounce.
Combined with the falling U.S. dollar, the rising price of precious metals is a symptom of the massive monetary inflation being created by the Federal Reserve. By holding interest rates artificially low at practically 0% for nearly one full year, the Federal Reserve has created the illusion that the U.S. economy is recovering.
The reality is that instead of preserving the U.S. dollar's remaining purchasing power, every action taken by the Federal Reserve has been destroying the purchasing power of our currency. The Federal Reserve's policy of massive monetary inflation in 2009, for example, has caused the Dow Jones to bounce over 50% from its low, oil to rise 100% from its low, and gold to surge to a new all time nominal high.
Ben Bernanke recently proclaimed the recession is "very likely over". While the recession may be over in nominal terms, massive inflation has just begun and prices of stocks and real estate will continue to plummet when valued in real money, gold and silver. It's impossible to just print our way out of a recession without increasing production. Sure, if they print enough money prices of stocks and real estate will rise when priced in dollars, but that won't mean a thing when it costs $10,000 to fill your refrigerator with food.
While most Americans are placated with lower prices for plasma TV's and other non-necessities, prices for essential products and services are rising all around us. Agricultural products are the next things we will see with massive price increases. Many believe the worldwide shortage of farmers combined with food inventories falling to record lows is setting up the perfect storm for an explosion in agriculture prices.
Today, the average American consumer spends approximately 30% of their income on housing and only 10% of their income on food. As the U.S. dollar continues to lose its purchasing power, you can expect these numbers to reverse in the years ahead. In Germany during hyperinflation, rents fell from 30% to less than 1% of the average households' expenditures while food rose from 30% to a high of over 91%.
To make matters worse, two pieces of legislation are working their way through Congress that if passed, will dramatically increase taxes, health care costs, and energy costs. With the annual federal deficit already at a mind boggling $1.4 trillion, the Obama Health Care agenda and Climate Control bill will add $Trillions more and the Federal Reserve's printing press will be working overtime to print more American prosperity.
The moneychangers of the world supported by the mainstream media are setting up the scenario for you to believe we have a "gold bubble", but the reality is today we have a "dollar bubble". Have you noticed the rise of precious metals recycling companies like Cash4Gold that are encouraging Americans to take advantage of "high gold prices" and trade in their gold for U.S. dollars. Those who get suckered into trading in their gold for U.S. dollars will soon realize it was the biggest mistake of their lives.
Those paper U.S. dollars are becoming more worthless with each passing day and soon the only thing you'll be able to count on is gold and silver.
So, what do you think? Do you suppose it might be a good idea to start accumulating a little gold and silver to protect yourself from hyperinflation? I recently joined a silver coin program that gets me silver BELOW spot price every single month. Take a look at how I Buy Silver American Eagle Coins Below Spot Price.