Gold News

Panic on the Streets of Britain!

The heady days of the Northern Rock run in 2007 marked a key turning point for shares, housing and gold...

FEW EVENTS of the last 10 years stand out for British investors quite like the bank run on Northern Rock of September 2007.

During a few heated days that autumn, thousands of private cash savers lined up on High Streets across the country, anxious to pull their cash out of the formerly cautious ex-building society.

A bank since 1997, Northern Rock had grown its mortgage book by almost one-half in the first six months of 2007. The result – right at the top of the UK's most recent bubble in house prices – was as inevitable as the government's useless response.

First ignored, then denied, then dismissed and finally bailed out with tax-payer funds before being gobbled up wholesale in the first nationalization of the 21st century, Northern Rock marked only the start of the UK's ongoing bank crisis.

But looking back across the 10-year horizon (as is our wont here at BullionVault right now...going 10 times better than every other pundit in rounding up the "big picture" as 2009 begins...) you can see just how dramatic the panic has proven since then.

Geared to the gills on short-term funds borrowed from the interbank market – rather than financed from cash-saving deposits, lent out for a modest return – Northern Rock now looks the axiom of Britain's carefree accrual of debt over the last decade or so.

Its crisis and then demise also marked a dramatic turn in the value of UK investment assets, most notably the housing bubble upon which Northern Rock's own boom was built...the stock market of which had been such a darling...and of gold, priced in Sterling – to which it stood in stark opposition.

The outlook from here may come to look less dramatic, of course. But for as long as the government tries to destroy the value of Sterling in a bid to inflate away debt (both public and private ), Gold Investment – if owned outright and free from all credit-default risk – may still perhaps prove a decent home for a chunk or two of your wealth.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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