According to the IMF, global debt has reached a new peak. Not only that, but according to the fund, there are three countries responsible: The U.S., China and Japan. These nations account for over 50% of total global debt, and China alone is responsible for about 75% of new private debt since the financial crisis.
The numbers are nothing short of staggering:
The IMF’s fiscal monitor reportedly stated that total debt reached $164 trillion in 2016. That figure, incidentally, represents 225% of global gross domestic product. The IMF also reportedly said that the globe is now 12% of GDP deeper in the red than it was at the previous peak in 2009.
To give this a little perspective, a debt figure of 225% of GDP means that the world is awash in debt that is over double what the global economy produces on an annual basis. The U.S. may also see its debt to GDP levels climb in the years ahead, following the recent tax cuts and increased government spending.
Clearly, the amount of debt that exists is an extremely serious problem. To make matters even worse, however, the increasing debt load comes at a very dangerous time.
The globe has seen ultra-low interest rates for the last decade or so. Governments fought the global slowdown with a mix of low rates and massive quantitative easing. Now that the economy is on more solid ground, central banks have been looking to normalize monetary policy and reduce their balance sheets. This can be accomplished in two ways: Hiking key interest rates and allowing previous bond purchases (QE) to come off the books.
Put another way, the world’s debt is increasing at the same time that interest rates are increasing. Rising rates will make it even more difficult for governments to pay down their debts. Some might even argue that there simply is no feasible way for all of the debt to ever be repaid, at least not without a significant currency debasement.
That is exactly why physical gold should make up a significant portion of your portfolio.
At some point, the debt burden will simply become too much for governments to bear. Higher interest rates could be the straw that breaks the camel’s back, and the only way out without massive defaults could be the debasement of the currency.
This means that every single hard-earned dollar would be worth significantly less. That, in turn, would drive up the relative costs of everyday goods and services. Disposable incomes would get hammered, and savings could evaporate.
It is more important now than ever before to protect your portfolio and finances from the effects of debt and a sharply lower currency. Hard assets like physical gold can potentially offer an important hedge against declining currency values and hyperinflation.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how easy it is to build a significant allocation in this key asset class using your IRA account.
Don’t wait for the negative effects of global debt to take a bite out of your portfolio. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, china, currency debasement, GDP, global debt, gold, government, IMF, japan