As debt problems in Europe intensify, gold's ready to fly to investors' rescue, but in a world of uncertainty, those investors want to know if they can safely put their trust in expectations for a significant climb in the metal's prices.
...
"The primary factor likely to lead to higher gold prices is the combination of safe-haven investor demand and pension and central-bank diversification into gold," said Mark O'Byrne, director at GoldCore. And "the real risks of a sovereign debt crisis and an international currency crisis are likely to make this demand remain robust for the foreseeable future."
...
"Gold's recent gains do not [justify] the severity of the Greek debt and European sovereign debt" crises, said O'Byrne
Stock markets collapsed yesterday in dramatic fashion as credit rating agency Standard & Poor's (S&P) lowered Greece's credit rating from BB+ to BBB+. In other words, Greek debt is now officially junk (according to S&P at least, and the other agencies may not be far behind).
S&P warned that if Greece restructures her debt, bondholders could recover as little as 30% of their initial investment.
Professor Roubini, the New York-based academic who was one of the few to anticipate the scale of the financial crisis, told a panel in California that the buildup of debt is likely to lead to countries defaulting or resorting to inflation to ease the burden on their populations.
“While today markets are worried about Greece, Greece is just the tip of the iceberg,” Roubini told the Milken Institute Global Conference in Beverly Hills, California. "The thing I worry about is the buildup of sovereign debt.”
The recent bursting of the great global credit bubble not only led to the first worldwide recession since the 1930s, but also left an enormous burden of debt that now weighs on the prospects for recovery. Today, government and business leaders are facing the twin questions of how to prevent similar crises in the future and how to guide the economises through the looming and lengthy process of debt reduction, or deleveraging.
It isn't so very difficult to fathom what is happening in the housing market, perverse as it may strike one. It is a matter, as the estate agents have been telling us for the past few months, of a "shortage of supply". It is this magic factor that apparently kept prices up during the second half of last year – probably with a little help from the Bank of England's ultra-low interest rates and a £200bn cash injection into the economy – and the trickle of buyers coming on to the market since January may soften prices over the coming months.
The financial crisis is "far from over," according to Peter Schiff of Euro Pacific Capital, as detailed here.
Along with his brother Andrew, Schiff has written a new book, How an Economy Grows and Why It Crashes, which he says is "for anyone who wants to understand the government, the economy, how it works and why we're in such a mess."
Unlike the vast majority of books written in the wake of the crisis, Schiff's latest is very light and breezy -- it's a cartoon book -- using an allegory about a local fisherman to explain the global economy.
When it comes to the PIIGS, Dr. Doom is in full-on doom mode.
Felix Salmon has some good notes on a PIIGS panel from the Milken Global Conference, which included Nouriel Roubini, who is in his wheelhouse when talking about sovereign debt crises.
“It’s not a question of the danger of contagion; contagion has already happened,” OECD secretary general Angel Gurria said.
“This is like Ebola. When you realise you have it you have to cut your leg off in order to survive,” he added, saying the crisis is "threatening the stability of the financial system".
Gold is currently trading at $1,155 in New York and £749 per ounce in London. International bullion dealers Gold Core report: “Gold in sterling has rallied by more than 2 per cent today as sterling has fallen on hung parliament and UK fiscal deficit concerns.
“Gold remains near record nominal highs in sterling on growing evidence that next week’s general election will produce a government without the parliamentary support needed to trim a large and growing budget deficit – the biggest among the Group of Seven nations.
“The UK deficit jumped by 76 per cent in the year through March to £152.8bn pounds, the largest since the Second World War II. In March, it was £23.5bn pounds, the most for any month since records
Financial markets have increased bets Greece will have to restructure its debt or face a default in the medium to longer term to tackle its fiscal problems even if it clinches a planned three-year aid package.
The cost of insuring Greek debt against default has surged to ever higher records and the cost of raising capital to pay off old debts and run the country is at its highest since at least early 1998 as investors have cast doubt on whether the deal is enough to resolve Athens's structural problems.
In an eerie sense of déjà vu, German finance minister Wolfgang Schauble pleaded with his country’s citizens on April 20th, to back a joint EU-IMF bail out for Greece worth up to €45-billion, warning that failure to act would risk another global financial meltdown. “We cannot allow the bankruptcy of a Euro member state like Greece to turn into a second Lehman Brothers,” he told Der Spiegel. “Greece’s debts are all in Euros, and it isn’t clear
Greece’s fortunes were dealt yet another blow as Standard & Poor’s slashed its credit rating to junk status - BB+ - the first time that has happened to a euro member since the single currency was created, pushing yields on 10-year Greek bonds up to a record 9.73pc.
The credit-rating agency also cut Portugal’s sovereign debt ratings by two notches to A-, as the swirling storm hit the country with full-force.
When I last wrote about gold, it was after what I called "freaky Friday" -- the steep, chart-disrupting price slump in gold triggered by heavy selling following the Goldman Sachs litigation announcement.
About the only element in the gold-watching crowd not aghast was the hard-bitten group I call the "radical gold bugs," mustered around Bill Murphy's LeMetropolecafe Web site. They were comforted (as so often) by their confidence in Indian buying. And they were even morbidly cheered (they're funny that way) by what they regarded as further proof of their defining belief: that the gold market is often manipulated by public and private interests.
New data shows the CPI rose 3.4pc during the year to March, up from 3pc the month before. The Bank of England will have to write yet another public letter to the Chancellor explaining why inflation is so high. The more accurate RPI index – including mortgage costs – registered an even steeper rise, from 3.7pc to 4.4pc.
These numbers were way above the median forecast of City "experts". Then again, the same experts have been under-estimating future inflation every month for most of the past two years.
Can we afford our financial system? The answer is no. Understanding why this is so is a necessary condition for evaluating ideas for reform. The more aware of the risks one is, the more obvious it becomes that radicalism is the safer option.
People pay too much attention to the direct cost of bail-outs. As Andrew Haldane of the Bank of England, author of several brilliant papers on the crisis, has noted , these costs may be around 1 per cent of gross domestic product in the US and UK. The costs that matter, however, are those of the recession and the huge jump in public debt. If only a quarter of the world's loss of output during the recession were to prove permanent, the present value of these losses could be as much as 90 cent of annual world product.
The relief rally fizzled shortly after Greece folded its bad poker hand and invoked aid. Bond risk as measured by Markit's 5-year credit default swaps jumped to fresh records of 280 for Portugal and 177 for Spain. Irish CDS contracts rose 13 points to 185.
This was an entirely logical response to the twisted events that are unfolding. The rescue obliges countries in trouble to go deeper into trouble. Portugal must come up with €774m as its share of the EU's initial €30bn package. Ireland must find €491m, Spain €3.7bn.
A report from the World Gold Council showed that the gold price finished the quarter at $1,115.50 an ounce according to the London pm fix price, compared with $1.087.50 an ounce at the end of last year. Despite its performance, investors would have had greater returns from investment in US or emerging market equities in the same period.
Juan Carlos Artigas of the World Gold Council said the recent gold price increase was achieved despite strong performance from the US dollar and stock markets, even though it is often assumed that there is a negative correlation between the gold price and equities.
Fortunes in Britain are soaring as the world recovers from the 2008-09 crash. Stock markets are up, the banks are back from the brink and economic confidence is blossoming. As a result, the collective wealth of the 1,000 multimillionaires in the 2010 Sunday Times Rich List has climbed to £335.5 billion, up £77.265 billion on 2009. This is a 29.9% increase, easily the biggest annual rise in the 22 years of the Rich List.
April
30
April
Debt misery helps gussy up gold's appeal (GC in MarketWatch)
Apr 30 2010 MarketWatch
As debt problems in Europe intensify, gold's ready to fly to investors' rescue, but in a world of uncertainty, those investors want to know if they can safely put their trust in expectations for a significant climb in the metal's prices.
...
"The primary factor likely to lead to higher gold prices is the combination of safe-haven investor demand and pension and central-bank diversification into gold," said Mark O'Byrne, director at GoldCore. And "the real risks of a sovereign debt crisis and an international currency crisis are likely to make this demand remain robust for the foreseeable future."
...
"Gold's recent gains do not [justify] the severity of the Greek debt and European sovereign debt" crises, said O'Byrne
Continue Reading
30
April
GoldCore will be closed on Monday, May 3rd, 2010 due to the May Day Bank Holiday in the UK and Ireland
Apr 30 2010 GoldCore
Continue Reading
30
April
What the Greek crisis means for gold
Apr 30 2010 MoneyWeek
Stock markets collapsed yesterday in dramatic fashion as credit rating agency Standard & Poor's (S&P) lowered Greece's credit rating from BB+ to BBB+. In other words, Greek debt is now officially junk (according to S&P at least, and the other agencies may not be far behind).
S&P warned that if Greece restructures her debt, bondholders could recover as little as 30% of their initial investment.
Continue Reading
30
April
Greece is just the 'tip of the iceberg', Nouriel Roubini warns
Apr 30 2010 The Telegraph
Professor Roubini, the New York-based academic who was one of the few to anticipate the scale of the financial crisis, told a panel in California that the buildup of debt is likely to lead to countries defaulting or resorting to inflation to ease the burden on their populations.
“While today markets are worried about Greece, Greece is just the tip of the iceberg,” Roubini told the Milken Institute Global Conference in Beverly Hills, California. "The thing I worry about is the buildup of sovereign debt.”
Continue Reading
30
April
Debt and deleveraging: The global credit bubble and its economic consequences
Apr 30 2010 McKinsey & Company
The recent bursting of the great global credit bubble not only led to the first worldwide recession since the 1930s, but also left an enormous burden of debt that now weighs on the prospects for recovery. Today, government and business leaders are facing the twin questions of how to prevent similar crises in the future and how to guide the economises through the looming and lengthy process of debt reduction, or deleveraging.
Continue Reading
30
April
Rising house prices in a slump? Madness reigns
Apr 30 2010 Irish Independent
It isn't so very difficult to fathom what is happening in the housing market, perverse as it may strike one. It is a matter, as the estate agents have been telling us for the past few months, of a "shortage of supply". It is this magic factor that apparently kept prices up during the second half of last year – probably with a little help from the Bank of England's ultra-low interest rates and a £200bn cash injection into the economy – and the trickle of buyers coming on to the market since January may soften prices over the coming months.
Continue Reading
29
April
Economics 101: Peter Schiff Explains "Why We're in Such a Mess"
Apr 29 2010 Yahoo News
The financial crisis is "far from over," according to Peter Schiff of Euro Pacific Capital, as detailed here.
Along with his brother Andrew, Schiff has written a new book, How an Economy Grows and Why It Crashes, which he says is "for anyone who wants to understand the government, the economy, how it works and why we're in such a mess."
Unlike the vast majority of books written in the wake of the crisis, Schiff's latest is very light and breezy -- it's a cartoon book -- using an allegory about a local fisherman to explain the global economy.
Continue Reading
29
April
The deadly property LIE that could ravage your finances in 2010
Apr 29 2010 MoneyWeek
IF you own property – or are thinking of buying back into the property market any time soon – you should look at this chart first!
I recommend you pay close attention because it may hold the key to your finances in 2010 and beyond…
Continue Reading
29
April
Roubini: "In A Few Days Time, There Might Not Be A Eurozone For Us To Discuss”
Apr 29 2010 The Business Insider
When it comes to the PIIGS, Dr. Doom is in full-on doom mode.
Felix Salmon has some good notes on a PIIGS panel from the Milken Global Conference, which included Nouriel Roubini, who is in his wheelhouse when talking about sovereign debt crises.
Continue Reading
29
April
Greek debt crisis spreading 'like Ebola' and Europe must act now, OECD warns
Apr 29 2010 The Telegraph
“It’s not a question of the danger of contagion; contagion has already happened,” OECD secretary general Angel Gurria said.
“This is like Ebola. When you realise you have it you have to cut your leg off in order to survive,” he added, saying the crisis is "threatening the stability of the financial system".
Continue Reading
28
April
Bad news is good news for gold in America and Britain
Apr 28 2010 The Telegraph
Gold is currently trading at $1,155 in New York and £749 per ounce in London. International bullion dealers Gold Core report: “Gold in sterling has rallied by more than 2 per cent today as sterling has fallen on hung parliament and UK fiscal deficit concerns.
“Gold remains near record nominal highs in sterling on growing evidence that next week’s general election will produce a government without the parliamentary support needed to trim a large and growing budget deficit – the biggest among the Group of Seven nations.
“The UK deficit jumped by 76 per cent in the year through March to £152.8bn pounds, the largest since the Second World War II. In March, it was £23.5bn pounds, the most for any month since records
Continue Reading
28
April
Scenarios: Options for Greece if it cannot pay its debts
Apr 28 2010 Reuters
Financial markets have increased bets Greece will have to restructure its debt or face a default in the medium to longer term to tackle its fiscal problems even if it clinches a planned three-year aid package.
The cost of insuring Greek debt against default has surged to ever higher records and the cost of raising capital to pay off old debts and run the country is at its highest since at least early 1998 as investors have cast doubt on whether the deal is enough to resolve Athens's structural problems.
Continue Reading
28
April
Could a Greek Tragedy Morph into a Lehman Meltdown?
Apr 28 2010 GoldSeek
In an eerie sense of déjà vu, German finance minister Wolfgang Schauble pleaded with his country’s citizens on April 20th, to back a joint EU-IMF bail out for Greece worth up to €45-billion, warning that failure to act would risk another global financial meltdown. “We cannot allow the bankruptcy of a Euro member state like Greece to turn into a second Lehman Brothers,” he told Der Spiegel. “Greece’s debts are all in Euros, and it isn’t clear
Continue Reading
28
April
ECB may have to turn to 'nuclear option' to prevent Southern European debt collapse
Apr 28 2010 The Telegraph
Greece’s fortunes were dealt yet another blow as Standard & Poor’s slashed its credit rating to junk status - BB+ - the first time that has happened to a euro member since the single currency was created, pushing yields on 10-year Greek bonds up to a record 9.73pc.
The credit-rating agency also cut Portugal’s sovereign debt ratings by two notches to A-, as the swirling storm hit the country with full-force.
Continue Reading
27
April
Gold survives Goldman Sachs
Apr 27 2010 MarketWatch
When I last wrote about gold, it was after what I called "freaky Friday" -- the steep, chart-disrupting price slump in gold triggered by heavy selling following the Goldman Sachs litigation announcement.
About the only element in the gold-watching crowd not aghast was the hard-bitten group I call the "radical gold bugs," mustered around Bill Murphy's LeMetropolecafe Web site. They were comforted (as so often) by their confidence in Indian buying. And they were even morbidly cheered (they're funny that way) by what they regarded as further proof of their defining belief: that the gold market is often manipulated by public and private interests.
Continue Reading
27
April
Our politicians have been happy to promote the deflationary myth
Apr 27 2010 The Telegraph
New data shows the CPI rose 3.4pc during the year to March, up from 3pc the month before. The Bank of England will have to write yet another public letter to the Chancellor explaining why inflation is so high. The more accurate RPI index – including mortgage costs – registered an even steeper rise, from 3.7pc to 4.4pc.
These numbers were way above the median forecast of City "experts". Then again, the same experts have been under-estimating future inflation every month for most of the past two years.
Continue Reading
27
April
The challenge of halting the financial doomsday machine
Apr 27 2010 The Financial Times
Can we afford our financial system? The answer is no. Understanding why this is so is a necessary condition for evaluating ideas for reform. The more aware of the risks one is, the more obvious it becomes that radicalism is the safer option.
People pay too much attention to the direct cost of bail-outs. As Andrew Haldane of the Bank of England, author of several brilliant papers on the crisis, has noted , these costs may be around 1 per cent of gross domestic product in the US and UK. The costs that matter, however, are those of the recession and the huge jump in public debt. If only a quarter of the world's loss of output during the recession were to prove permanent, the present value of these losses could be as much as 90 cent of annual world product.
Continue Reading
26
April
Maastricht madhouse fuels EMU-wide contagion from Greece
Apr 26 2010 The Telegraph
The relief rally fizzled shortly after Greece folded its bad poker hand and invoked aid. Bond risk as measured by Markit's 5-year credit default swaps jumped to fresh records of 280 for Portugal and 177 for Spain. Irish CDS contracts rose 13 points to 185. This was an entirely logical response to the twisted events that are unfolding. The rescue obliges countries in trouble to go deeper into trouble. Portugal must come up with €774m as its share of the EU's initial €30bn package. Ireland must find €491m, Spain €3.7bn.
Continue Reading
26
April
Gold has a strong start to the year
Apr 26 2010 The Telegraph
A report from the World Gold Council showed that the gold price finished the quarter at $1,115.50 an ounce according to the London pm fix price, compared with $1.087.50 an ounce at the end of last year. Despite its performance, investors would have had greater returns from investment in US or emerging market equities in the same period. Juan Carlos Artigas of the World Gold Council said the recent gold price increase was achieved despite strong performance from the US dollar and stock markets, even though it is often assumed that there is a negative correlation between the gold price and equities.
Continue Reading
26
April
The Sunday Times Rich List 2010: Rising from the rubble
Apr 26 2010 The Times
Fortunes in Britain are soaring as the world recovers from the 2008-09 crash. Stock markets are up, the banks are back from the brink and economic confidence is blossoming. As a result, the collective wealth of the 1,000 multimillionaires in the 2010 Sunday Times Rich List has climbed to £335.5 billion, up £77.265 billion on 2009. This is a 29.9% increase, easily the biggest annual rise in the 22 years of the Rich List.
Continue Reading