The editor of Future Junctions shares his insight with the radio show host.
Grand Rapids, MI -- (SBWIRE) -- 02/20/2013 -- When financial advisor Dennis Tubbergen isn't busy advising his own clients, you can usually find him writing his weekly newsletter at www.moving-markets.com or playing host to his internationally-known guest experts on his weekly radio show.
His latest guest is Jeff Kennedy, Chief Commodity Analyst at Elliott Wave International (EWI). With more than 20 years of experience as an analyst and trader, Kennedy edits Future Junctions, EWI's premier commodity forecasting package that focuses on Elliott wave analysis of the commodity markets. Over the past 10 years, he has also written a column called Trader's Classroom.
Tubbergen, who is an author, radio show host, and CEO of Personal Legacy Planners, LLC (http://www.plplanners.com/) also spends a lot of time giving his opinions in his financial blog at www. dennistubbergen.com. On February 13, 2013 Tubbergen's blog was titled "Math Proof the Money Madness Will Stop Soon."
"Billionaire Eric Sprott, in an interview with King World News, predicted silver prices as high as $200 per ounce due to the unsustainability of the current debt and deficit levels," began Tubbergen.
Tubbergen quotes from the article, "We had a negative print on GDP in the 4th quarter. The fact is I think we are on shaky ground. The shakiest part of the ground is the new numbers put out by the Department of the Treasury showing under GAAP what the true deficit was last year.
"It includes both the cash deficit, which I think was around $1.2 trillion plus the increase in the present value of known obligations. Together those two added up to a deficit of $6.6 trillion for the year. Shadowstats suggested this year, 2013, the numbers could be pushing close to $10 trillion.
"Professor Kotlikoff suggested the known future liabilities are $220 trillion. When you reference those numbers against a GDP of $16 trillion, it's obvious that the obligations can't be met.
"We've seen with various countries when they've had to impose austerity, had to cut pension payments, cut civil service salaries, and I'm using Greece and Spain as my two examples, you immediately had unemployment go to 25%. You had retail sales fall by double-digits. I think that has to happen.
"We have all of these obligations that have never been funded, and the time is coming when the money is going to start going out the door. I'm just not a believer in the sustainability of the economy when I look at those numbers."
Pierce goes on to say that there is an impact. When people have to face the fact that they are not going to receive their anticipated pension or the benefits they expected to receive are cut, the result is a serious economic slowdown.
He adds, "I've always worried about the leverage in the financial system, it will come to pass. There is now doubt that the path we're on is not sustainable both for the economy, and for the financial system."
Pierce states he "believes silver will far outperform gold. And needless to say, I'm incredibly bullish on gold, so I'm sure we'll be seeing $100 and $200 prices for silver."
Tubbergen notes, "While I wouldn't say that we'll see $200 per ounce for silver, it wouldn't surprise me at some future point either. In an economic winter season, metals typically perform well while stocks suffer. Professor Kotlikoff, who has been a frequent guest on my radio show, the Everything Financial Radio Show, quoted in this interview, has done extensive work in the area of the U.S.'s fiscal gap. And, unlike many politicians, he has offered real common sense solutions to these issues."
Tubbergen goes on to say that Sprott makes a great math argument using Kotlikoff's data.
"If the real deficit this year is somewhere between $6.6 trillion and $10 trillion, and the economy produces $16 trillion, we are close to the point of reversal since tax revenues on that $16 trillion are about $2.5 trillion," notes Tubbergen.
Tubbergen believes you can break this down in terms of a household. If your annual income is $25,000 and you have total household debt of $160,000, you would approximate the current relationship between total federal government direct revenues and total official federal government debt. On top of that debt, you have promised some elderly family members that you will provide income for them as well as pay for their healthcare. This will require another $80,000 per year.
According to Tubbergen, putting the government's current fiscal situation into household terms makes it easy to see that this path is unsustainable not just long term, but also in the near term.
"If the money printing continues to attempt to kick this unsustainable can down the road a bit further before the reversal point hits, I believe Sprott's prediction about higher gold and silver prices will be correct," concludes Tubbergen. "That's why I've been advising many clients to own some physical gold and/or silver in their portfolios."
To read the blog in its entirety go to www.dennistubbergen.com and select his February 13, 2013 entry. His interview with Jeff Kennedy will be available as a podcast soon at http://www.everythingfinancialradio.com/.
Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.
About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog that can be read at www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to www.moving-markets.com.
The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.