Investors Seek Hard Currency – Gold Bullion – in Face of Possible US Credit Rating Downgrade.
Thursday, March 18th, 2010Gold bullion’s appeal strengthens as the U.K. and U.S. have moved closer to losing their AAA credit rating. According to Moody’s Investor Service the cost of servicing debt is the primary concern that could lead to the detraining credit rating for the world’s largest economy. According to Pierre Caileteau, managing director of sovereign risk at Moody’s in London, under the ratings company’s so-called baseline scenario, the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K., and will be the biggest spender from 2011 to 2013
In a telephone interview with Bloomberg.com, Cailleteau said “We expect the situation to further deteriorate in terms of the key ratings metrics before they start stabilizing, this story is not going to stop at the end of the year. There is inertia in the deterioration of credit metrics.”
According to Moody’s adverse scenario, which assumes 0.5 percent lower growth each year, the U.S. will be paying about 15 percent of revenue in interest payments, more than the 14 percent limit that would lead to a downgrade to AA.
Many investors are considering a position in gold and silver coins as a hedge against the falling dollar and to have a hard currency available in the safety deposit box; not to mention the potential for appreciation.
Investors looking to reduce their risk exposure are encouraged to contact one of our friendly specialists, to get a better understanding of how to best utilize gold bullion in their portfolio.
Steve Kickner





