Is The UK A Bankrupt Nation?

by Mark Salmon on 26/08/2010

Invest in gold now!

For some time I have been advocating that my readers invest in gold as a hedge against our bankrupt nation.

For times immemorial, gold has globally been seen as a store of value. Our currency used to be backed by gold i.e. the central bank held gold bullion in reserve to back their production of  paper money.

This backing is no longer there and hasn’t been for some time. Gordon Brown wisely sold off our remaining gold reserves right at the bottom of the market – another good decision! This decision was compounded by a reckless spending policy that has literally bankrupted the UK.

You may feel this is overstating our predicament but this article from the Cobden Centre sets out our true position in stark terms. I fear that the current Lib-Con policies of slashing public spending are a very much case of ‘shutting the stable door after the horse has bolted’.

You may wish to reconsider your future financial position in the light of this article about our bankrupt nation.

Marks says 'get your FREE Marketing Analysis here' or 'to be 'kept in the loop', why not get my free newsletter by subscribing below?'

Comments

Powered by Facebook Comments

Tagged as: bankrupt nation, invest in gold, UK

  • Benny

    Hey Mark,

    Just saw this post on Katie Freilings blog.. We are a bankrupt nation hence why we are under admiralty jurisdiction.. Or, subject to statute law you may say. Statutes are commercial law, not applicable to humans unless the society is bankrupt. Anyway, sorry that was a bit heavy!

    If you go as far as possible out of general perception about finance and what economics is, the only things of true intrinsic value to us, are not gold but consumables and shelter. I understand the idea of gold hedging against inflation as it is a tangeable item, but the only reason it has value is because the ‘general perception’ of gold is that it is real money or ‘God’s’ money as Mr. Kiyosaki would put it. It is just another belief system that only works when everyone agrees, like fiat currency.

    If all went to pot, gold wouldn’t do you many favours as it has no use! I would suggest purchasing cheap property and holding it as it would still have value in any turnaround, if you truly wanted to hedge against fiat decline, or at least go for silver in the modern world as it is a consumable and supply is far less than demand.

    Sorry I’m so depressing!!

    I hope you’re good fella :)

  • Anonymous

    Thank you for these useful observations.

    I agree that gold has limited use and also your advice to invest in silver – I invest in silver too.

    However, I view gold simply as a currency or store of wealth. It has been viewed as such for thousands of years and its supply is strictly limited – something that cannot be said for fiat currences unless backed by gold.

    If the purchasing power of our fiat currency declines as a result of the government turning on the printing press, then I would expect gold to increase in ‘value’ versus that currency.

    I also agree that consummables and shelter will be valuable but they may not be a good store of wealth – many consummables have a limited shelf life and shelter needs maintaining and managing, is not portable and not very liquid. Your tenants might not pay or trash the property when they leave – having spent some time in banking, I’ve seen it all.

    I don’t have all the answers to what would happen if we all lose confidence in fiat currencies. All we can do is position ourselves as best we can – I have a large vegetable garden and easily can walk into town from my house – two possible hedges against food and fuel prices.

    Investing in whisky might be the answer – it doesn’t deteriorate with age and it can be consumed – if the worst happens, by me!!

    It seems slightly surreal to write like this but I fully expect the dollar will go into hyperinflation within 5 years and the consequences will be severe for many people.

  • Benny

    I think whiskey is the best yet! Nice! It’ll keep you smiling if all goes wrong too! lol

    If you’re predicting hyperinflation, surely that could strengthen the argument for property no? I understand that Gold and Silver are safe bets but hear me out..

    Purchase rental properties at the lower current price, mortgage them to the hilt but make sure they are in positive cashflow each month when rented. Then surely as the dollar hyperinflates there would be more foreclosures on primary residences increasing the demand for rentals, hopefully making you feel more secure in your rentals, plus you have the added bonus of the ‘value’ of your mortgage being inflated away. Pay of your mortgages when stuff stabilises with the hugely cheaper dollars? Just as long as the mortgages are covered by tenants surely ur in good shape?

    Sorry, as you might have guessed I like to speculate a lot. I often get things a little confused but love getting other opinions to mull over!

    Anyway, I hope you’re good!

    Tc

    Benny

  • Anonymous

    Benny, sorry for the delay in my reply.

    I know Robert Kiyosaki likes rental properties. As an ex-banker I am a little more cautious. Repayment of your mortgage is dependant on your tenants paying the rent. Bitter experience tells me that this does not always happen and it is costly and time-consuming to remove a non-paying tenant who could also trash your property on the way out. (Plus it wouldn’t surprise me if the Banks restate your mortgage using some sort of discounted cash flow calculation or put the interest rates through the roof to compensate for inflation.)

Previous post:

Next post: