Americas Silver Corp fka USAPF

[permabear]

The conservative Heritage Foundation is throwing out the idea of selling U.S. reserves of gold to pay off debt.

http://www.newsmax.com/US/gold-Heritage-fortknox-debt/2011/05/16/id/396540

As the article above shows, at current $1500 price, selling U.S. reserves would raise all of $370 billion. This wouldn't even make a dent in the national debt of over $14 trillion. It would barely scratch the surface of the current budget deficit of $1.5 trillion.

In short, it is a lunatic idea and I'm glad to see some sense is coming out of the White House rejecting the idea.

If in fact they did decide to sell the gold, we would see a crash in the gold price worse than 2008. Investors in gold would get crushed. But I don't think it's happening any time soon.

I can see a scenario down the road, when the U.S. might get backed into a corner and be forced to sell its gold. If the bond market and dollar suddenly collapsed and China threatened to sell off it's treasury bonds. If the U.S. was facing total collapse, that would be the time the U.S. might be forced to sell its gold. This is not an impossible scenario by any means. But if it happens, I think gold will be trading north of $5000 an ounce.