...To Protect Against "Systemic Risk"

FIDELITY: Hold "Physical Cash”, “Including Gold and Silver” To Protect Against "Systemic Risk";

- Hold physical cash “including gold and silver” says manager in one of largest mutual fund and financial services groups in the world
- "Systemic risk" threat to deposits says respected Fidelity fund manager
- Record global debt unlikely to be sustained by higher interest rates
- Banks may not be prepared for "shock" of defaults
- Guarantees to depositors unlikely to be honoured
- Savers and investors should hold “physical currencies” “including precious metals”

A fund manager for one of the largest mutual fund and investment groups in the world, Fidelity, has warned investors and savers to have an allocation to “physical cash,” “including precious metals” to protect against "systemic risk".

Ian Spreadbury, who oversees the investment of over £4 billion of clients money in bond markets for Fidelity told Telegraph Money

“Systemic risk is in the system and as an investor you have to be aware of that.”

He believes that the record debt that has been ballooning since the crisis of '08 due to interest rates being forced down to near zero by central banks. This debt, particularly where mortgages are concerned, would likely become unsustainable if, and when, rates rise to realistic levels.

“We have rock-bottom rates and QE is still going on – this is all experimental policy and means we are in uncharted territory.”

He points out that in such an environment banks would be unable to sustain the losses caused by defaults on unserviceable debt which would lead to a systemic crisis.

Spreadbury is not the first high profile financial expert to warn of an impending systemic crisis. We recently covered how Stephen King, chief economist at the world's third largest bank HSBC, likened the global economy to the Titanic. Andrew Wilson, Goldman Sachs Asset Management’s chief executive in Europe recently gave similar warnings.

Spreadbury highlights that the £85,000 guarantee to UK depositors by the Financial Services Compensation Scheme is largely unfunded and that the government has said it will not intervene to rescue failing banks in the future - leaving deposits to be bailed-in.

ENDS

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