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NIA had argued for long that prices of U.S. stocks were overvalued. NIA expects to see precious metals prices decouple from the prices of U.S. stocks in 2010. Gold and silver provide both the safe haven investors sought in late-2008 when they mistakenly bought U.S. dollars, as well as the protection from inflation investors sought in 2009 when they mistakenly bought overvalued stocks. Inflation will become more evident to everyday Americans in the months ahead as some of those taking profits on U.S. stocks, seek to spend their U.S. dollars on consumer goods and services. When the prices of consumer goods and services begin to rapidly rise, the need to own gold and silver will become very obvious to the general population.

It was just announced last week by the Congressional Budget Office that the 2010 budget deficit is expected to reach $1.35 trillion. A $1.35 trillion budget deficit assumes 2% GDP growth in 2010, which we believe is improbable. This morning it was announced by the White House that they are projecting a $1.56 trillion budget deficit this year, which accounts for a 7% increase in non-defense discretionary spending, not including costs for last year's stimulus package. With the stimulus package included, the increase in non-defense discretionary spending would equal 17%.

During his State of the Union address, Obama promised a three-year discretionary spending freeze in an effort to cut down on future deficits. However, this spending freeze won't begin until 2011 and it excludes defense, education, as well as programs like Social Security, Medicare and Medicaid, which currently make up over $60 trillion in unfunded liabilities. If Obama was serious about cutting down on the budget deficit, he would implement dramatic spending cuts across the entire Federal Budget immediately.

Obama's new budget is projecting the deficit to decline to $1.3 trillion in fiscal year 2011 and then to $700 billion in fiscal years 2013 and 2014. This budget assumes that the economy will recover and tax receipts will rise. Unfortunately, the only reason the economy is showing signs of recovery today, is due to the Federal Reserve's 0% interest rates. Interest rates will inevitably rise a lot higher over the next few years, which will put an end to the economic recovery. Combined with the retiring babyboomers, tax receipts are much more likely to decline in the years ahead. Once you take into account the likelihood of rising interest payments on our national debt, NIA believes the U.S. is on a path towards a very minimum of $3 to $4 trillion budget deficits this decade.

Obama's support of the "Volcker Rule", which would ban banks from making speculative investments into hedge funds and private equity funds, is another example of Obama addressing the symptoms of our problems and not the underlying causes. If the government allowed insolvent banks to fail, they wouldn't be able to recklessly speculate in hedge funds and private equity funds. Smaller banks with competent management would've taken over the assets of the failed banks that had incompetent management, and today banks would be competing with each other based on safety and who takes the least risk. By the government adding more regulations to address the problems they caused, they are creating new unforeseen problems that will have to be dealt with in the future, while preventing the free market from efficiently sorting out the mess we are in today, NIA said.