Sovereign Debt projected for 2011

Source:  OECD, Dundee Wealth Economics

The monetary turmoil in Western Europe and some early signs of inflation create the right conditions for gold to continue its run. Credit woes in Europe on the back of concerns about the finances of Portugal, Ireland, Greece, Spain, and Italy had a negative impact on the euro and the British pound both depreciated against the US dollar over the quarter (Q1 2010). 

 

Sovereign debt is a key driver of the current economic jitters. 

 

This figure shows next year's sovereign debt estimates for the G-7 and other key global economies - the U.S. debt in 2011 would be about equal to GDP ($15 trillion), while the debt loads carried by Japan, Italy and Greece would exceed GDP.

The USA will try to print more dollars in order to increase the inflation and thus to decrease its debt as they did in 1933 (when prices move faster than interest rates the debt weight decrease. Some economist of the democratic party calculated that if inflation in the U.S. increase from 2% to 8% it will lower the debt by 21%.).

So this is the right time to invest in gold, as we know that gold is a good inflation and a weak dollar hedge.

“The masses in the developed world are just now waking up to how their personal wealth can be affected by the future inflation spawned by the trillions of dollars and euros created to finance economic rescue plans - the potential implications for gold are profound. Here's one way to look at currency destruction -- 10 years ago this week (17/05/2010), $1,000 bought nearly four ounces of gold, and today $1,000 won't even get you a single ounce. Gold is money, so when you look at the gold-dollar exchange rate, the dollar's value has fallen by a startling 78 percent just in the past decade.”   

Frank Holmes, CEO U.S. Global Investors

“Investment demand for gold - and investment demand for commodities generally - is in early days. This is only just starting to develop… One of the things that I see when I travel around North America is that more and more people are starting to question: What is currency debasement? How does it work?"

Martin Murenbeeld, head economist at Dundee Wealth Economics 

"Gold still represents the ultimate form of payment in the world."   

Alan Greenspan, Testimony before US House Banking Committee May 1999.                                                                      

“With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.” Friedrich August von Hayek (Economist)

 

"The Federal Reserve (Banks) are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this Nation is run by the International Bankers." 

 Louis McFadden (Banker and Republican member of the U.S. House of Representatives)

 

"A great industrial Nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the Nation and all our activities are in the hands of a few men. [...]”  

 Woodrow Wilson   (ex U.S. president) NWO