AS A DOUBLE dip global recession emerges as more likely than not, the PNG government and central bank must plan a response.
It is in our national interest (and security) that the government adopt certain financial hedging strategies as part of a long term plan.
Every country is vulnerable and PNG’s strategic aim must be to safeguard our financial system and economy. We are facing a potential financial catastrophe if we do nothing to build a wall against global debt disaster.
There are already many near bankrupt sovereign states like Spain, Italy, Greece, Portugal and others sitting on top of a financial system that is struggling.
The worry is that the system is being kept on life support by phony valuations and unlimited money printing. Many investors are exchanging this funny money for gold.
But the problem is not just the debt of these nations. Tax revenues are collapsing at the same time, while the cost of social maintenance is soaring.
The indebted governments have two choices: continue to borrow and print money or reduce government spending.
Countries like the
What can our domestic banks learn from observing the world economy? As many paper currencies become virtually worthless in the next few years, gold will continue to do what it has done for 6,000 years and maintain its purchasing power and appreciate substantially against paper currencies.
During the impending downturn, which I expect to start within the next few weeks, investors will discover that gold is one of the very few ways to protect their assets and preserve capital.