The Effects of the Downgrade

By now, you’ve no doubt heard that Standard &
Poor’s has downgraded the U.S. credit rating one notch.

Let’s first understand that this downgrade is more a political statement
than a financial one. And it’s not likely to affect U.S. Treasury yields
much.

I think we all agree that the level of debt the U.S. has taken on is not
sustainable. Spending cuts are necessary, and that will need to include the
so-called entitlement programs.

Debt Deal Done: Will the U.S. Get Downgraded?

Well, well. Congress did it. And more than a full
day ahead of Treasury Secretary Geithner’s absolute deadline on Tuesday,
August 2. I will admit, I’m surprised. Not that they reached a deal —
after all, I playfully wagered my entire business that a deal would get
done with High Yield
Wealth
editor Steve Mausy. But I figured it would be a
midnight deal.

Of course, nothing is signed, sealed and delivered just yet. I expect that
may not happen until this evening. But the rhetoric from Congressional
leaders and the president suggest the signatures are a
formality.

Lost in the Shuffle (intc, rtn, msft, tlt, aapl)

It was somewhat lost in the shuffle in Wednesday.
Investors were so stunned at Fed Chief Ben Bernanke’s admission that
commodity inflation might accelerate over the next few months before the
Fed is forced to act on interest rates, they missed the part where the
Fed lowered its 2011
GDP
growth estimates from a range between 3.4% — 3.9%
to 3.1%.

For anyone pinning his or her hopes on 3.9%,
that’s got to be disappointing.

But after yesterday’s first read of Q1 2011
GDP growth — a
measly 1.8% — investors are likely to take another look at the total
message delivered by the Fed.

Who’s Going to Pay?

The Federal government is on the verge of shutting
down as politicians are unable to agree on budget cuts for 2011. Yes,
2011. It’s April, and Congress has failed to approve a budget for the
year.

I’m not pointing any fingers here. But there are a
few things that make me wonder. 5% of the
U.S. population controls nearly
64% of American wealth. And yet budget proposals would rather restructure
Medicaid than raise taxes on the most wealthy.

Utah Returns to the Gold Standard

Lawmakers in New Hampshire, South Carolina, Tennessee and Virginia have
introduced bills that would allow them to mint their own currencies, or
otherwise allow for alternative currencies to settle debts both public
and private.

Utah recently passed a bill recognizing gold and silver as legal tender.

Texas Congressman Ron Paul recently introduced a bill which would allow
gold and silver (among other precious metals) to compete with Federal
Reserve notes.

Oil is Hot, Silver is Hotter

Oil is getting all the headlines, as it jumps over $100 a barrel for the
first time in 3 years as Libya’s production is essentially shut down. But
it’s silver that’s really setting records.

Silver prices are projected to more than double this year.Silver
hit a 31-year high just below $35 an ounce on Tuesday.

Silver is benefiting from the same inflation concern that’s pushing gold
prices higher. But unlike gold, silver also has industrial uses.

That means silver prices may be more stable than gold.