You'll have noticed that we have a Budget to endure later today.
We'll be updating on the main points this afternoon. But for all the hype, we're not expecting anything world-changing. Maybe we'll be proved wrong, but this Budget will be more about laying out an election manifesto, rather than anything more substantial.
Apart from anything else, there's not much the government can do right now. After all, it may not be in power come the summer. So any big changes suggested by Alistair Darling this afternoon are hypothetical.
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The real budget will come after the election. It's only then that we'll get any idea of how or even if the government is going to try to tackle Britain's massive debts.
One thing's for sure, we probably won't be following Ireland's example any time in the near future. And that's good news for anyone holding gold, as we'll explain in a moment...
Ireland had to slash public sector pay
There's a lot of talk of a 'spring of discontent' over here. British Airways workers have gone on strike. British Gas workers have just voted to do the same.
So the idea that we could slash public sector pay without facing a complete societal breakdown seems far-fetched to some. Yet over the water in Ireland, that's exactly what they've done.
Libby Purves wrote a piece in The Times this week, marvelling that the average public sector pay packet had been cut by 13.5%. And yet, despite plenty of grumbles, "Ireland has not ground to an indignant halt the country has not imploded into the chaos of suicidal strikes, unburied bodies, closed schools and garbage mountains, which the UK or France would expect as a matter of course if a government did any such thing."
How are the Irish different to us, that they can accept such hardship, yet maintain a stiff upper lip? Purves wonders if it's down to a stronger sense of community. Or perhaps Irish civil servants have a better understanding that "a secure and pensionable job is a privilege". Or maybe, she says, the Irish are just nicer than us.
It's fun to indulge in cod philosophising about cultural differences. But it's also nonsense. The reality behind Ireland's apparently meek acceptance of a grim situation is nothing to do with national characteristics. It's far more prosaic than that. The Irish realised that whatever they did, they were stuffed. And one major reason for that is the euro.
There is no easy way out for Ireland. They don't have their own central bank, so they can't devalue their currency as Britain has. So they have a choice. They can take their medicine, in the form of slashed public spending and improved productivity. That means deflation, unemployment, and falling house prices, until the imbalances of the credit bubble are corrected.
Or they could abandon the euro, and swap it for the 'punt mark II'. That would devalue their currency all right. But the hit would come all at once. The punt II would collapse against the euro. Ireland would effectively turn into Iceland overnight.
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So caught between a rock and a hard place, the Irish have little choice but to accept their lot. That's not to say that the relative calm will last. But "on the whole there seems to be an understanding that such measures are unavoidable. These draconian fiscal policies wouldn't have been possible five years ago. But the political winds have changed," says Dylan Grice at Socit Gnrale.
You should be holding gold
So what's all this got to do with the price of gold? We'll get to that in a moment. For Grice, the lesson to take from Ireland is that "a fiscal crisis is required to force a majority acceptance of the implications of an overleveraged government." In other words, a population really needs to have its back to the wall before it realises that harsh spending cuts are preferable to the alternative.
The trouble is, most countries which have control over their own central banks are miles away from opting for "fiscal sustainability". They'd much prefer to pin their hopes on more money printing. "Indeed, the pressing fear among policy makers today remains that stimulus might be removed too soon."
And that's why you should be holding on to gold. Like us, Grice believes that gold is best thought of as an insurance policy. "The reason I own gold is because I'm worried about the long-term solvency of developed market governments." Forget the on-balance sheet debts, which are bad enough. It's all the future promises on healthcare and pensions that will really push our countries into insolvency.
When should you sell gold?
And if you look across history, says Grice, "from ancient Rome, to Ming China, to revolutionary France and America, or to Weimar Germany you'll find that uncontrolled inflations are caused by overleveraged governments which resorted to printing as the easiest way to avoid explicit default."
Eventually, some sort of "government funding crisis is both inevitable and necessary." And when it comes, "majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold," says Grice. Our own Dominic Frisby said something similar a few months ago: Three ways to tell when gold's bull market is over.
But until then, "the temptation to inflate will remain." And in that case, gold is the best protection you can get against currency devaluation. Why? Because unlike other assets, such as inflation-linked bonds, it has no counterparty risk - you're not dependent on any other party to assure its value. So regardless of how bad things get, gold "is the one insurance policy that will pay out when you really need it to." You can find out more here about how to invest in gold.
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