The “X Date”

The US debt ceiling has already been raised many times. This time, however, the risk of an X-date breach is more substantial than in previous cycles. The X-date refers to the point in time when the U.S. Treasury can no longer pay its liabilities. Domestic payments will certainly be prioritized. If a longer delay in debt service were to occur (one month), then gross domestic product would go down about 0.7 percentage points, and hundreds of thousands of jobs would be lost, according to an analysis by UBS, a major Swiss bank. While this scenario is rather unlikely, it cannot be ruled out.

Particularly surprising in this case: US ten-year yields would fall. This would be related to the high liquidity of this investment medium, according to UBS experts. Liquidity beats the manageable default risk in this case. Gold, on the other hand, would also be strengthened. Because in all cases of uncertainty and default, the gold price would perform well. According to Treasury Secretary Janet Yellen, the X date could fall as early as June 1. At that point, the Treasury may well be unable to meet its payment obligations.

The U.S. president can sign a law raising the debt ceiling, in which case the problem would be postponed until September. Originally, the debt ceiling was a convenience. It eliminated the need to approve each individual debt. So overall, again, gold should emerge as the strengthened investment medium, even though gold prices may come under pressure in the meantime. Investors can then use such lower prices to make additional purchases or new investments in the precious metal. Those who are not only looking for security but are also looking for leverage on the gold price, which certainly involves more risk, can turn to the shares of gold companies. Examples are Victoria Gold and Skeena Resources.

Victoria Gold – https://www.commodity-tv.com/ondemand/companies/profil/victoria-gold-corp/ – owns the Dublin Gulch property in the Yukon. The Eagle gold mine it contains is already producing successfully.

Skeena Resources – https://www.commodity-tv.com/ondemand/companies/profil/skeena-resources-ltd/ – is focused on revitalizing the previously producing Eskay Creek gold-silver mine in British Columbia’s Golden Triangle. A feasibility study is available.

Current corporate information and press releases from Skeena Resources (- https://www.resource-capital.ch/en/companies/skeena-resources-ltd/ -) and Victoria Gold (- https://www.resource-capital.ch/en/companies/victoria-gold-corp/ -).

In accordance with §34 WpHG I would like to point out that partners, authors and employees may hold shares in the respective companies addressed and thus a possible conflict of interest exists. No guarantee for the translation into English. Only the German version of this news is valid.

Disclaimer:

The information provided does not represent any form of recommendation or advice. Express reference is made to the risks in securities trading. No liability can be accepted for any damage arising from the use of this blog. I would like to point out that shares and especially warrant investments are always associated with risk. The total loss of the invested capital cannot be excluded. All information and sources are carefully researched. However, no guarantee is given for the correctness of all contents. Despite the greatest care, I expressly reserve the right to make errors, especially with regard to figures and prices. The information contained herein is taken from sources believed to be reliable, but in no way claims to be accurate or complete. Due to court decisions, the contents of linked external sites are also co-responsible (e.g. Landgericht Hamburg, in the decision of 12.05.1998 – 312 O 85/98), as long as there is no explicit dissociation from them. Despite careful control of the content, I do not assume liability for the content of linked external pages. The respective operators are exclusively responsible for their content. The disclaimer of Swiss Resource Capital AG also applies: https://www.resource-capital.ch/en/disclaimer/