Today, we need to talk about something I generally steer clear of – the political debacle unfolding in Washington.
As you’ve likely heard by now, Congress is in a standoff to negotiate a deal to raise the debt limit by June 1.
And while it’s important for the general operation of the U.S. government, I’m more focused on the one thing the media heads aren’t talking about.
You see, whether a deal is even made or not (and hopefully it is), we’re looking at what could be the biggest once-in-a-lifetime-profit opportunity
What is the Debt Ceiling?
We won’t get too far into the weeds on this subject, but it is important to understand exactly what is happening and what is at stake in these ongoing negotiations.
Basically, the debt ceiling is a limit placed on the federal government on how much money can be borrowed to pay its debts and earmark for future spending. Congress is bound by the Constitution to authorize the issuance of new debt.
The debt ceiling is currently set at $31.46 trillion.
The problem lies in that the U.S. government is set to run out of funds by June 1.
In order to avoid default, Congress must agree to raise or suspend the debt ceiling by that date. Failure to do so would impact the government’s ability to pay Social Security, Medicare, veterans’ benefits, as well as current military service men and women.
While this process has been playing out for many decades, recently Congress has seemingly had a difficult time coming to an agreement when it becomes necessary to raise the debt ceiling.
Debt has become a very unpopular topic in politics.
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Politicians are reluctant to appear as though they’re allowing debt to spiral out of control. Compounding the issue is that it has become common for politicians on both sides of the aisle to tack on unrelated legislation onto spending bills in an effort to get a proposal passed that otherwise wouldn’t get through Congress on its own.
Again, I’m not going to get into the finer points of the current negotiations or point any fingers at what’s holding it up. That’s not what I’m here to do.
Instead, I’m solely focused on a pattern that has emerged when debt ceiling negotiations go down to the wire.
Since 2011, there have been three times when Congress pushed debt ceiling negotiations to the brink of the “X-Date,” the day on which the U.S. would default on its debt if it failed to raise the debt ceiling.
And each time, we’ve seen a significant jump in the price of gold as the deadline approached…
History Doesn’t Repeat, but it Often Rhymes
In 2011, Democrats and Republicans were not able to reach a compromise on the debt ceiling until the 11th hour, signing an agreement just hours before the deadline.
While that obviously was not an ideal situation for a lot of reasons, it was a fantastic time for gold investors.
Beginning roughly two weeks before the X-Date of August 2, gold investors were handsomely rewarded.
Fueled by investors fleeing to safe havens like gold as the threat of default loomed – in addition to the U.S. credit rating being downgraded – gold began a run up of more than 18% that would eventually peak at a new all-time high in late August.
Just two years later, Congress found itself unable once again to reach an agreement to raise the debt ceiling. This time, the deadline technically passed before an accord could be reached, with the Treasury Department needing to enact extraordinary measures to keep the government financed.
And once again, investors flooded the gold market to avoid the impending pain in the stock market – and drove the price of gold up by 6.2% in just over two weeks.
In a far more recent example, a default on U.S. debt was once again narrowly avoided in 2021, with the deal to raise the debt ceiling reached a say after the Treasury Dept. estimated the country would exhaust its funds.
The fear created by the threat of yet another default began what would become an 11.7% surge for gold – again beginning roughly two weeks ahead of the X-Date.
Right now, we find ourselves in a similar situation, with two weeks before the current deadline date of June 1 and a deal nowhere in sight.
Add that to the myriad of catalysts for a gold price surge I’ve been detailing recently, and the latest debt ceiling crisis looks like it could be what kickstarts the massive breakout for gold and other precious metals I’m predicting.
I’ve already begun to prepare members of Resource Traders Alliance for the coming gold boom with our first trade, but the profit opportunities are far from over.
In fact, we’ve only just begun…
For more details on just how huge the opportunity you have in precious metals is (Spoiler Alert: I believe it’s could be the biggest market event in years), what exactly is driving it, and how you can take advantage, check out my full presentation here.
To your success,
America’s #1 Pattern Trader