Counter-party risk, is risk based on another person/company’s ability to pay you back or honor their commitment.
Example: When you buy a stock or bond, the company or municipality issuing it is your counter-party risk based on their financial strength.
In the past a government bond was considered one of the safest investments on the planet.
With a $22 Trillion debt (not including the unfunded liabilities of Social Security, Medicare, Medicaid and a host of other off-the-books debts), it’s mathematically impossible for the US to pay off its debt.
In other words, our debt has become toxic.
That’s why nations like China (the largest owner of US Treasuries) are quietly dumping those bonds in exchange for hard assets (like gold).
Russia (at one time a big player in US debt) has recently off-loaded over 90% of its US Treasury bonds.
The US can default on their debt.
(Contrary to popular opinion the US defaulted on their debt in 1790, 1861, 1933, and in a near miss in 1979).
This won’t happen until the boyz in the “Club” hit the reset button and the global economy goes into a tailspin.
By then your government bonds will go (like traders say) “No Bid.”
That means there are no buyers…anywhere.
What’s ironic is that your money is safer in corporate bonds.
I realize this goes against normal thinking but stay with me here.
Corporations have assets, real estate, factories, etc. that can be used as collateral if they default.
But the irony is when government bonds go into default, money scrambles into hard assets.
Gold will be one of the major beneficiaries mostly because it has NO COUNTER-PARTY RISK.
And there are plenty of stocks that will surge in the madness that will continue to fuel The Most Hated Bull Market in History.
Learn more about it (HERE).