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Category: Money Morning

How Will the Debt Ceiling Debate Affect Gold Prices? Money Morning

If you’re wondering how the debt ceiling debate will affect gold prices, you need to check out a new report from Goldman Sachs Group Inc. (NYSE: GS).

Investment powerhouse Goldman believes gold prices will log impressive gains over the next three months as the debt ceiling debate takes center stage on Capitol Hill. The bank is advising investors to position portfolios ahead of upward moves in the precious metal.

“We see current prices as a good entry point to re-establish fresh longs,” Goldman analysts Damien Courvalin and Alec Phillips wrote in a Jan. 18 report.

The bank reaffirmed its three-month price target for gold of $1,825 an ounce. (Gold was trading at $1,695.20 in New York Tuesday.)

“The uncertainty associated with these (debt-ceiling) issues, combined with our economists’ forecast for weak U.S. GDP growth in the first half of 2013 following the negative impact of higher taxes, will push gold” to the three-month target, the report stated.

The Goldman strategists pointed out six instances between 1996 and 2007 when the country hit the debt ceiling and the Treasury responded by using its muscle to execute “extraordinary measures” to keep the country afloat and running.

Gold prices rallied some 10% in half of these instances in the month prior to the debt-limit increase.

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Middle Class Decline Under Obama Shown in 5 Charts – Money Morning

U.S. President Barack Obama often makes a point of talking about how important our country’s middle class is to our economic growth – something he reiterated yesterday (Monday) in his second inauguration speech.

“Our country cannot succeed when a shrinking few do very well and a growing many barely make it,” President Obama said. “We believe that America’s prosperity must rest upon the broad shoulders of a rising middle class.”

But the financial reality that currently faces the U.S. middle class is not one that can support a country’s economic future.

For example, many middle-class workers have lost jobs or taken a pay cut since the president took office in 2009, and the 7.8% unemployment rate is the same as when President Obama first took office.

The labor force participation rate – the percentage of working-age people who are employed or actively seeking jobs – is at its lowest level in over 30 years, and those who are working are making a lower median income than they did 10 years ago.

At the same time, almost half of Americans are unprepared for financial emergencies. About 49% of Americans don’t have enough money saved to cover three months of expenses and 28%don’t have any money saved, according to a survey by consumer financial services firm Bankrate.com.

Here are five startling charts that outline a middle class decline that’s taken shape under President Obama.

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