Monday, May 24, 2010

Superior Gold Group - U.S., UK both face long-term debt concerns

Concerns about rising sovereign debt levels are increasingly not limited to Europe these days. As Greece continues to struggle with its own deficit crisis, observers are taking note of the large annual deficits incurred by the United States in recent years.

Writing in the UK's Telegraph newspaper, Economics Editor Edmund Conway reports that the governor of the Bank of England is among those who suspect that the United States shares a number of the same budget problems that Europe has.

The U.S. national debt is rapidly approaching $14 trillion, but the country is not alone among large economies that could be stung by irresponsible deficit policies in the coming years. Conway goes on to note that the budget deficit is also "the single most pressing problem facing the United Kingdom."

The reason large deficits are of such concern to investors is that as these debts increase, they become increasingly expensive for countries to finance and tend to consume ever-larger percentages of the gross domestic product.

Another major concern presented by high budget deficits is the risk of a credit default. Given the market instability a default by a major economy could create, now may be the time to consider a dealer gold investment.