The bullion-dollar question: will gold escape debt crisis?

Bull view: go on yellow

Few dispute that gold offers protection against inflation and debt crises. The metal cannot be printed at will and does not carry a risk of default.

Where opinions do vary – wildly – is whether or not we face the risk of such inflation or debt crisis.

The message today is that the Western economies are pretty  much under control again, the United States avoided its fiscal cliff,  and European officials assure us that the worst is over. But this is  public relations talk. During the 2008-09 global credit crisis, governments and central bankers were only able to save the global financial system with a radical programme of money printing and debt expansion.

One might ask, isn’t that how we got into so much trouble in the first place? Didn’t the West create asset bubbles and huge debt thanks to ultra-loose monetary policies?

The recent fiscal cliff debate was just a distraction from the real problem in the US: its out-of-control debt and unfunded liabilities add up to a staggering  US$202 trillion, according to  Laurence Kotlikoff, an economist. David Walker,  former comptroller of the US last year  said the US was “two years away from where Greece was when it had  its crisis”.