Over $2 bln Withdrawn From Northern Rock Due to Mortgage Crisis: Bank of England To The Rescue

The panic amongst savers at the British bank Northern Rock may be getting out of control as over $2 billion dollars, roughly £1 billion, has been withdrawn.

The Bank of England had to step in to save Northern Rock, as it offered emergency funding to the troubled mortgage lender.

Northern Rock is the fifth largest mortgage lender in the UK, but even they are being hit by the global financial credit crunch.

This underlying problem in the mortgage market was commented on in The Gold Prices Newsletter today (read article):

“The British people are in debt to the order of about £1.3 trillion via mortgages and credit cards etc. The underlying asset is their own homes, should these property values decline then negative equity arrives and many will suffer badly.”

According to The Gold Prices Newsletter, investors should be selling banking, home loan and mortgage stocks and buying precious metal stocks.

“As former shareholders in Northern Rock we sold our holdings some time ago to raise cash for other investments namely precious metals. If we compare the performance of Northern Rock against a mid tear gold stock such as Agnico Eagle then it is astonishing. [Agnico has increased 500% whilst Northern Rock has almost halved] The point is though that one asset class is in the ascendancy and the other is not.”

How do you think investor can protect themselves from the mortgage and home loan crisis?

Is investing in assets such as gold the way to go?

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