Montreal, Canada

I’m convinced the United States will be forced to print its way out of economic misery. This process has already begun since 2008 in an exercise called “Quantitative Easing” whereby the Fed buys or monetizes U.S. fixed-income securities to help keep interest rates low.

The endgame will be the worst inflation since the 1970s, possibly even hyper-inflation, which nearly destroyed the German economy in 1924.

Other central banks have been engaged in similar unorthodox operations since the financial crisis with little resultant inflation. In fact, broader monetary aggregates remain in a downtrend over the past 12 months, depicting the rising threat of deflation as banks continue to hoard reserves in an environment of weak loan demand and tepid loan growth.

The Wall Street Journal published an excellent op-ed last Friday (Treasury’s and the Danger of Short-Term Debt), which soberly describes the dangerous state of America’s short-term financing. The author, Jason DeSena Trennert, makes a strong case for a massive dislocation of U.S. debt financing over the next several years, possibly before.

And herein is my case for gold, silver and other hard assets as the Piper comes calling on Treasury one day.

Monetary printing will assume a bull market trajectory at some point as deficit financing takes its toll on government revenues.

According to Mr. Trennert, 60% of America’s debt is set to mature within the next three years or $5.2 trillion dollars. That’s an enormous amount of money, which is currently financed by the lowest short-term rates since the Eisenhower administration. The weighted average cost of U.S. government debt is just 1.21%.

But what happens when interest rates rise? We all know interest rates won’t stay at these low levels forever. That lowly rate of 1.21% can easily double, triple or quadruple.

Every percentage point rise in interest rates will balloon America’s deficits by a few hundred billion dollars. Treasury has compromised the nations’ finances by clumping 60% of debt financing at the short end – a dangerous imperative in a world growing increasingly nervous about the challenges facing sovereign government debt.

When bond market vigilantes grow nervous, they force rates higher. Just look at Greece, Dubai, Spain, Portugal and Ireland as ongoing examples.

Basically, the government’s interest cost is going to rise exponentially at some point in the near future; when it does, the risk of the Fed losing control of the money-supply will risk the dollar’s legitimacy, batter the economy and probably result in another financial crash.

We face the real threat of another Weimar in the early 21st century. Gold remains my #1 hedge against the growing possibility of an explosion in U.S. inflation from now until 2015.

In the absence of a credible deficit reduction plan – and Congress is still spending like mad – I urge investors to protect themselves from the upcoming monetary debacle threatening the already pathetic state of the global exchange rate system. No currency will be a safe-haven.

Gold is your anchor. Use any short-term correction in the price as your last major buying opportunity in this bull market.