It is real now: US government debt is "not risk free" anymore

Honestly I did not expect that S&P, one of the biggest ratings agencies, would keep their words to downgrade the U.S. long-term debt from AAA to AA+. They finally shows some courage but still they are way behind the curve. I have said before and will say it again that the US has been bankrupt already. There is no way for the US to repay all its debt. Based on this, even an AA+ credit rating for the US is too high. So why can the US survive till now? Simply because the US dollar is the world reserve currency and the US government can print the money without a limit. However, just like an immature adult who has been given a signed empty cheque, the US has abused his credit too much with extreme profligacy. Unfortunately such a spendthrift game will end eventually and end very badly! It is just a matter of time.

If you want to protect your assets for your retirement, the only way is to back up them with sound money, the precious metals. I will highly suggest that you use any pull back to add more or to establish new positions for gold and silver. The dire trend for the US dollar has become more and more unambiguous. It will take a long long time for the ultimate end to come; so it is not too late at all.

For the immediate term, as I said, this is a uncharted water that no one has any experience with. It has long been thought as unthinkable for the US not to have the highest credit rating. Therefore the psychological impact could be huge. On the other hand, this is not really something totally surprising since S&P has talked about this possible downgrading for a few months. In reality, there is no other currency which can replace the US dollar as the world reserve currency in any foreseeable future. Even with an imperfect rating, the US debt is still much "safer" than any other country's debt, given the US government can print money as much as it wants. So my bet is that the market may plunge severely on Monday but some reality reckoning may step in and brave investors may start to take the opportunity to buy. After all, the market has been extremely oversold at the current status and a turnaround in the near term is not something unthinkable. Anyway, the most important thing for you is to stick to your exit principle with stop loss in place for your positions. Don't run due to panic or act emotionally. Stay calm and only take action rationally, which will let you beat most of others in the market.