‘The Rock’ released statement after statement saying all was well, and that savers and shareholders shouldn’t be nervous. The company was in good shape, they said.
Of course this is exactly what the guys at the top have to say. If they don’t, they risk a loss of confidence. But you shouldn’t believe a word of it…
And now the same kind of messages of reassurance came from European politicians and bankers to defend Greece’s position. Of course, the markets don’t believe a word of it. And nor should you.
The fact is, trouble in Greece is set to send dominoes falling across Europe. And that includes the UK.
With Northern Rock, eventually the government bailed out the depositors. But this time, it’s the government that’s at risk. Who’ll bail out government depositors?
Let’s go back a bit and see what happened in Iceland…
Lessons from Iceland
By the time Iceland’s major banks were nationalised in September 2008, it was already too late for most of its people to take evasive action. They were stuck with cash savings in krona and probably most of their assets denominated in krona too.
The krona crashed…
And since then, Icelandic people have had their savings slashed, and suffer inflation from the krona’s devaluation.
How Icelanders must now wish they’d acted sooner to get some foreign assets or maybe a bit of gold into their portfolios. How they must wish they hadn’t listened to all the reassuring promises from the authorities!
Because, with a bit more foresight, individuals could have put measures in place to profit from the carnage.
Unfortunately, we have much in common with Iceland. An independent currency and a bloated banking system for starters.
For us to put faith in our independent currency and the Bank of England to get us out of any fiscal tight spot is a dangerous gamble.
The Greek drama is exposing Britain’s weakness, and you need to get ready to take preventative action…
The European drama unfolds
The pound has been weak against the euro for a good couple of years now. You might think that the unfolding euro-zone crisis would allow the pound to regain lost ground.
Not so. While the dollar has had a good run, the pound has barely budged. The reason for this is clear. The markets are fretting about Britain’s own deficit problems.
In terms of our public sector deficit, we’re in the same boat as Greece. We both have a deficit around the 12-13% mark. Worse, here in Britain we don’t seem to have any political will to make the changes necessary to avert crisis. All we’ve got is an independent bank with the power to print currency – and that’s supposed to be our strength!
Remember, when the crisis looms, it’ll come quickly. The authorities will tell citizens there’s nothing to worry about – the problem’s down to mindless speculators they’ll say. Be on your toes if we get to this point. Be ready to re-shape your portfolio quickly.
The worst assets to hold in a crisis
The looming crisis will be quite different to the one that unfolded a couple of years ago. Back then, sanctuary was found in cash and gilts. This time around, cash and gilts will be the most dangerous place to be.
I’m still a believer in gold. This truly global currency has stood the test of time. Other currencies come and go, but gold is unique and it can’t just be printed.
Gold is trading at all time highs in sterling terms. Not surprising as it tends to rise when the market’s concerned about paper currency.
10 Year Gold Price GBP
The sterling:gold price is telling us something. It’s telling us that the markets faith in the pound is waning fast.
Don’t be last in the queue for your money as the authorities are busy reassuring the nation.
There’ll be a short period of time when all about you are losing their heads. That’s the moment to shift your assets to safety. The door will slam shut pretty quick. You’ll need to have a plan. You’ll need to know where to put your assets.
Colleagues at The Fleet Street Letter’ have a plan. They’ve advised investors for over 71 years, through boom to bust and back again. They’ve been working on a strategy that involves both gold and international diversification. It’s a two-pronged assault.
First, they’re advising readers to buy assets that will profit if the worst comes to the worst.
Second, they’re telling readers how to react if the markets do an ‘ Iceland on Britain’.
Don’t wait until it’s too late. Some Icelanders believed the government rhetoric – and just look where that got them!
Good investing...
Bengt Saelensminde
For The Right Side
P.S. On Monday (it’s a bank holiday – yes I know), I’m going to show you another way to profit from any traumas that could be coming our way. I’ve been working on a ‘market neutral strategy’ that will profit if the UK economy takes a hit. At the same time, the strategy profits from the strength of our largest international companies.
Sound too good to be true? Well, take a look on Monday.
P.S. If you enjoyed this article you can find out more about our free email, The Right Side by clicking here.
