Let Precious-Metal.org Explain How The LA Credit Dop Highlights The Need For Precious Metals

February 24, 2010 – While not widely broadcast, Standard & Poor’s Corporation notified city officials in Los Angeles that it was lowering the city’s general fund credit rating from AA to AA-, and reducing the rating on its Municipal Improvement Corporation from AA to A+. This treacherous situation emphasizes the need for investors to have holdings in precious metals such as gold, silver and platinum to protect their assets.

S&P cited the city’s inability to stop spending money it doesn’t have as part of the decision; this is a devastating blow to both an over-spent California and the first warning shot of what lies ahead for the United States.

Preceded a Moody’s Investor Services Inc downgrading from stable to negative, Standard & Poor’s stated disappointment that the city council had done nothing to stem its growing losses. The current budget deficit is $212 million and the deficit is expected to swell to $484 million in the next year on a total budget of about $7 billion. City Administrative Officer Miguel Santana told the City Council, "It will mean we will have to spend millions more (in interest payments) to get credit."

This downgrade should serve as a startling wake-up call to the federal government as well. With a national debt that is approaching 100% of the GDP, America as a country is in a far more serious situation than Los Angeles, with numbers approaching those of Greece. With both inflation and payment default looming for the US, investors should look to move assets into commodities that are not dollar-based, both protecting current holdings and possibly increasing wealth as the dollar begins to slide.

While the Los Angeles credit downgrade is being ignored by the mainstream press, it will not be able to be ignored when it hits America as a whole. Investors should look to add precious metals to their portfolios as a protection for the crisis that looms ahead. 

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Danny Burns

Senior Staff Writer - Precious-Metal.org