They may have been stating the obvious but Standard & Poor's downgraded its credit outlook for the US from "stable" to "negative" last Monday (4/18/11).  The rating agency believes the possibility exists that Washington politicians may not be able to compromise on how to reduce our nation's projected long-term budget deficits.  Although the US will continue to keep its top rating for now, the announcement does signal that our country has a 1-in-3 chance (per S&P's guidelines) that fiscal circumstances could force a ratings downgrade within the next 2 years.  Out of 19 countries worldwide that are ranked AAA by S&P, the US is the only nation that has a "negative" long-term credit outlook today.  Surprisingly, the notice did not have an immediate harmful impact on interest rates as the yield on the 10-year Treasury note rose by just 2 basis points (i.e., 0.02%) to 3.40% by week's end (source: S&P).   

The rebuke from S&P came just 6 days after the International Monetary Fund (IMF) had admonished the US, stating that the largest economy in the world lacks a "credible strategy" to reduce those same projected budget deficits.  By its measurement, the IMF believes that the US is not doing enough to cut its deficit in half by 2013, a pledge that world leaders made in late June 2010 at a G-20 summit in Toronto (source: IMF).     

Gold has set all-time nominal record closes (i.e., the non-inflation adjusted price of the commodity) for the last 5 trading days, reaching $1,503 an ounce last Thursday (i.e., on 4/21/11, a day prior to a closed market on Good Friday).  Gold has now risen by +30% over the last year and by +65% over the last 2 years (source: CME Group).