"Kings and serfs begin to share the same castle."

I have quoted the wisdom of Bill Gross before. He is the

Managing Director of Pacific Investment Management Company (known as PIMCO), the largest bond fund manager in the world with over $1,000.1 billion in assets under management (that is a trillion). Anyone who is responsible for managing over a trillion dollars gets my attention. Here is what he was quoted in Forbes magazine a few weeks ago. I agree with his rationale.

“Ah, but Dubai, Iceland, Ireland and, recently, Greece pointed to a potential flaw in the model. Shaking hands with the government was a brilliant strategy in 2009, when it was assumed that governments had an infinite capacity to leverage themselves.

“But what if they didn’t? What if… our modern era was similar to history over the past several centuries, when financial crises led to sovereign defaults or at least uncomfortable economic growth environments…What if -- to put it simply -- you couldn’t get out of a debt crisis by creating more debt?”

Whatever the answer, “Government bailouts and guarantees such as those evidenced and envisioned in Dubai and Greece, as well as those for the last 18 months with banks and the large industrial corporations across the globe, suggest a more homogeneous ‘unicredit’ type of bond market. If core sovereigns such as the U.S., Germany, U.K. and Japan ‘absorb’ more and more credit risk, then the credit spreads and yields of these sovereigns should look more and more like the markets that they guarantee. The kings, in other words, in the process of increasingly shedding their clothes, begin to look more and more like their subjects. Kings and serfs begin to share the same castle.”

You don't have to be an indebted serf. Life is all about positioning. Gold coins as investment in your portfolio can hedge you against serfdom. A gold coin in your hand is prudent while kings castles shake.