Global Warming Will Help Push US Deficits (And Gold) Higher

October 13, 2018

London (Oct 13)  Judging by comments left to many of my articles, there are still a substantial number of Seeking Alpha users who do not believe that man's activities are having a significant and negative impact on global warming. Of course, I disagree. But one thing we can agree on: the costs related to the ever more frequent and severe storms - that are fueled by higher air and water temperatures - are skyrocketing. Adding such a huge unknown (and un-budgeted line item) to an already dire deficit outlook, I would argue, is bearish for the fiscal deficit/debt outlook, but extremely bullish for gold.

Take a look at the following graphic for the number and types of weather-related disasters just last year (2017) alone:

Source: NOAA

Note the wide variety and geographic dispersion of severe disasters that had multiple occurrences in a single calendar year:

•major floods (2)

•major wildfires outbreaks (2)

•major tornado outbreaks (3)

•major hurricanes (3)

My contention is that the unknown and un-budgeted recovery costs of these severe climate-related disasters are going to significantly drive up US deficits and debt far beyond already dire forecasts. The investment angle for US investors is to buy gold.


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