Financial Advisor Asks: Is The Gold Standard Just Around The Corner?

Online, June 8, 2011 (Newswire.com) - Financial advisor Dennis Tubbergen has been discussing the worldwide financial situation for months in his online blog and in his monthly newsletter Moving Markets™. Tubbergen, who is a financial advisor, advisor to financial advisors, author and radio talk show host, focused on the gold standard in his June 1, 2011 blog.

"Recently, there's been more talk than normal about a return to the gold standard," explains Tubbergen. "If you're not familiar with the gold standard, in its simplest form it requires that the currency of a country be backed by gold. "

According to Tubbergen, that means a country can only print in paper money what it has in gold in the country's vaults to back up the paper currency.

"Many politicians and the bankers at the Federal Reserve don't like a gold standard because it imposes discipline on spending," adds Tubbergen. "Under a gold standard, you can only spend what you have in gold."

Tubbergen refers to an article from Helium economic news on May 26, 2011, which states, "Sometimes controversial trends analyzer Gerald Celente is forecasting that a return to the gold standard will not be enough to save the U.S. economy from collapsing."

The article goes on to say that Celente, who is the publisher of Trends Journal and advises several top U.S. corporations, was asked his opinion on a return to the gold standard. His reply was the following, "A return to the gold standard by the United States within the next five years now seems likely, since that move would help the nation solve a variety of economic, fiscal and monetary ills."

Celente does not believe that a gold standard would save our economy, as it cannot erase our current debt or make our federal government adopt different policies.

"Celente makes a point that is very salient," observes Tubbergen. "While a return to the gold standard could impose fiscal discipline on policymakers provided the Federal Reserve is kept in check and not allowed to devise plans to 'end run' the discipline imposed by the currency, it won't deal with the current debt and outstanding liabilities of the federal government."

But Tubbergen does believe a return to the gold standard would impose fiscal responsibility.

"It is impossible to spend like the U.S. is currently spending under a gold standard," claims Tubbergen. "That means the politicians would have to get on the same page as far as entitlements are concerned. And, given the recent defeat of the Ryan plan in the Senate by a wide margin, the politicians are a long way from getting on the same page."

As Tubbergen notes, the Ryan plan did not balance the federal budget until 2030. He believes it is doubtful that even under that plan the U.S. Dollar could retain its status as the world's reserve currency.

"There would simply have to be too many years of deficit spending to get the country to that point," concludes Tubbergen. "Under a gold standard, we'd likely be forced to get there more quickly. From that perspective, I believe that Celente is correct."

Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in the USA Wealth Management Building in downtown Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog that can be viewed at www.dennistubbergen.com. His weekly talk show The Everything Financial Radio Show is simulcast on two Michigan metro stations and also airs to over 600,000 financial advisors, with recent podcasts available at www.everythingfinancialradio.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.