There’s only one reason you need to own gold
Published on June 4, 2011
And it’s called National Debt. If you come from my generation then the National Debt is something 'left over from the war’ and that it bothered your parents. Well i’ve got news for you and it’s all bad – the National Debt is still here and it’s bigger than ever! How big? I’ll tell you later, but first...
Every corporation, be it a company or a country, needs to have the ability to borrow. It helps with cashflow because it balances the ‘cash in – cash out’ problem. Its the same as being overdrawn at the bank but it’s organised and managed. Used correctly its no bad thing.
The problem comes when you can’t afford your borrowings and this is what has happened to Greece. Their problem is horrific because the money (the capital) was borrowed with no intention of paying it back and now they can’t even afford the interest payments. Greece is goosed.
So how much has England borrowed and what is the situation? Well the latest information from the Office of National Statistics states that “Public sector net debt (excluding financial interventions) was £910.1 billion (equivalent to 60.1 per cent of GDP) at the end of April 2011. This compares to £765.5 billion (53.0 per cent of GDP) as at the end of April 2010”.
Now three things come from this.
1. 910.1 BILLION! Holy cow - that’s a lot of money! I shall write it for you because its a lot of noughts. £910,100,000,000. It doesn’t make it any nicer though, does it?
2. It’s gone up by £144.6 billion – that’s 7.1% in one year.
3. We, as a country, have borrowed 60.1% of our GDP.
Can I quickly explain the term “Gross Domestic Product”? Put simply, it means everything that went through the till – what we turned over. But that’s not a true picture because it includes what we spent as consumers so all those imported goods that you buy get counted to make our GDP. So it’s not what we’ve made and exported as a country but what we’ve spent. What went through the till.
But that’s not why you should buy gold because if you read th ereport further and add the financial interventions then it says: “The unadjusted measure of public sector net debt expressed as a percentage of gross domestic product (GDP), was 148.9 per cent at the end of April 2011 compared with 150.9 per cent at end of April 2010. Net debt was £2252.9 billion at the end of April compared with £2180.0 billion a year earlier”. What comes out of this? Five things.
1. Unadjusted. Unadjusted? Do you mean “before we massaged the figures” or “the real figure”? Which one or both?
2. What is a “Financial Intervention“? It’s where the government bails out a corporation.
3. £2252.9 billion. No dramatics this time, it looks like this. £2,252,900,000,000.
4. It’s gone up by £73,000,000,000 in one year
5. The financial element equates to £1,342,800,000,000
6. We, as a country, have borrowed 148.9% of our GDP.
OK, six things but has the penny dropped yet? An old boy said to me once “when you find yourself in a hole, stop digging”. At 148.9% I can liken our economy to a boat that has 10 holes but we’ve only got 9 plugs. Taking a bung out of one hole to plug another is pointless because we’re sinking either way. Our economy is sinking and like Greece, we’re goosed. Can I ask you, would you lend us any money? Of course you wouldn’t – you can’t pay back what we’ve borrowed as it is.
“What’s with the ‘we’?” I hear you ask, “it’s not my debt!” Well who do you think the debt belongs to? In more accurate parlance, who is liable? That’s where you come in. Your government (you voted, not me!) has borrowed this money on your behalf and used you as surety. Oh, you thought Cameron and Clegg were going to pick up the bill, didn’t you! Sorry, but no, they’re just the administrators and you're the public – the bill has got your name on it. Gordon Brown then? Nope. You are the surety because you are a citizen. The debt is yours.
So here’s your choice. Either work until you drop, paying off this debt that you’ve been saddled with or take some responsibility, get some independence and look after your own wealth. It’s easy to do and it starts with one small coin.
Check out the other blogs for more education and if you want to do the right thing for your family then reclaim what you are responsible for and garner your own wealth.
A brighter future for your investing
David Peers
Partner
Point to note – I am a bullion dealer. I do this for a living. What is written here is for your education and should not be taken as ‘advice’. If you act then take some responsibility for your actions.
http://www.statistics.gov.uk/cci/nugget.asp?id=206
