Clive Maund is excited about gold and silver again (click here and here or here).The implication of his present very bullish call for the precious metals is that things will work out favourably for the Euro at this particular juncture in history, but that it will be an inflationary solution (despite what the new European Central bank President, Mario Draghi, has been saying lately).
That is, the guys who typically make the smartest bets on the direction of global financial markets are going double or nothing on the Euro right now.
If there is an inflationary solution to the problem, look for gold to pass the $2000 level in the wink of an eye.
Mr. Maund's December 4, 2011 gold chart follows:
If there is more dithering, look for a massive and immediate crisis that will force a response - as, if things go too far, there will remain no reasonable way to fix the Euro. (The gold price will rise more slowly in the second scenario.)That is, Humpty Dumpty has not yet toppled off the wall. If he does, it will be a chaotic scene for months and/or years to come.
14 January 2012: Mr. Maund changed his mind on this topic. However, I haven't. He worries about deflation. I don't.
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I would like to bring to the attention of investors take a look at the exchange traded note trading under the symbol {GAZ} It tracks the price of natural gas using futures contracts. Natural gas is one of the few commodities that still a great bargain compared to other commodities. Its price is down by 80%over the last 4 years.
ReplyDeleteFrom the East side of the pond it seems to me that the Euromess will continue.
ReplyDeleteImagine how the USA would be if each state had been able to run up huge debts for a decade or more and there was no mechanism for redress or re-balancing.
The Eurozone is not a federal body - there is no proper Euro government.
Bill Bowen billandpixi@gmail.com
Most European states do not want another costly level of government in any case.
The chances of politicians sorting such a complex problem are slim to none.
Things are so far out of whack that any solution would probably be so costly as to spell doom at election time.
The Greeks and possibly others need to default come what may.
Theoretically the French and Germans could save the Greeks but they can do nothing for Spain or Italy (just look at the relative size of the GDPs).
The US Dollar and gold both look good to me - I can't see how a continuing Euromess will lead to slower appreciation of gold.
Anonymous, I agree with your analysis, apart from your endorsement of the US dollar. Bill Fleckenstein sums it up - it takes a printing press to get a AAA rating. That in my mind is not financial security. The US dollar is an imaginary safe haven only. As an aside, several of the US states are bankrupt also, and the situation is analogous to Europe in that the states also cannot "print" their way out of the problem. By my analysis, 2012 will be a year of crisis due to these issues. I believe people will get scared this year, and he implication is that interest rates on government bonds, including US bonds, will start heading higher. Remember, at 7%, most governments cannot pay their bills, and that includes the US.
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