It’s not just quasi-governmental companies such as Fannie Mae and Freddie Mac that are broke says Eric Sprott, CEO of Sprott Asset Management.

“The reality is that the U.S. government is broke,” he tells Hera Research Newsletter. “If you take all of the unfunded liabilities — the number is something like $60 trillion or $100 trillion — there’s absolutely no way that it can be repaid.”

What’s going to happen? “They’re going to have to repudiate some obligation, just as other governments are doing now,” Sprott says

Monetary policy can’t be trusted, he says. “All of history says we shouldn’t trust government, so why do we trust the money that the government says is worth something when the history of governments is one broken promise after another?”

What governments are best at is collecting taxes and racking up huge debts, he says.

So what are attractive investments in this environment?

“I think of things that can be used as a medium of exchange, such as gold and probably silver, or maybe other precious metals,” Sprott says. “That’s the category I think is the most survivable in terms of holding its value.”

Many others are bullish on gold too.

Jeffrey Nichols, an economic adviser at Rosland Capital, sees the precious metal hitting $1,500 an ounce by year-end. Gold isn’t a bubble, he tells Hardassetsinvestor.com. “We haven't seen a rush into gold. It's been orderly, and it's been for good reasons.”