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lt-edged securities, are government-backed securities. They are so named because the certificates originally had gilt edges.

The government does not trade, but repays the investor from state income, including taxes. Money lent in gilts is used to fund the budget deficit. No government has ever yet defaulted on a gilt-edged security, and there seems little chance at present that any government ever will. They are therefore considered very safe, and are often included in portfolios which need such safety.

Gilts are issued for repayment of a fixed amount at a set date. Tenders are invited for amounts less than the fixed repayment, the difference representing the effective investment income. Once issued, the gilts are traded like shares and other securities.

If the gilt is for less than five years, it is called 'short-dated'. Short-dated gilts are sometimes just called 'shorts'. Between five and ten years, they are called medium-dated. For more than ten years, they are called long-dated.

Sometimes the government issues securities with no fixed repayment date. The best-known is consolidated stock, more commonly known as 'consols'. These were first issued in the eighteenth century and take their name from the fact that they consolidated the national debt.

They carry interest at 21/2% per annum and sell at a price which reflects the yield on comparable securities. Local authorities and the governments of other countries also issue securities, usually on a similar basis to the British

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