Julian Phillips’ latest commentary on the gold and silver markets and geopolitical events in Europe.
The events in Greece are still being digested as the new party now has sufficient a majority to carry out its new role. The I.M.F. has renewed its commitment to assist Greece, but with its usual terms, so the new government is likely to balk at such offers. With Greece’s debt now so large that country just cannot repay it, there seems little choice for creditors but to give this debt a major haircut. But Germany has renewed its intransigent position not to agree to such measures. The next week/month will be unstable as the political/financial battle rages.
With western democracy based on politics being separate from finances, such a battle goes to the heart of the Eurozone and not only that but to the structures operating in the western world. Which is more important, finance or politics? We will see which in the next few months.
A question that has also not yet been asked is, “Will China offer Greece financial assistance?”
With Russian debt no longer of a quality for central banks or others, after the credit downgrading to junk status by S&P, the insurgency in Ukraine, now a civil war, with Russia intervening, together with gas supplies being cut from Russia and the potential for major ruptures in the Eurozone, Russia is moving to a critical point, enhancing the growing divisions between Asia and the developed world. The degrading of the situation in Russia can also ensure a recession in Europe, on top of its current difficulties. This is a very different world to 2014 already.
Market and ETF News
New York closed yesterday at $1,280.40 down $13.30. In Asia gold held that level. The Fix this mornin saw the gold price set at $1,279.00 down $3.75 and in the euro, at €1,132.961 down €8.58, while the euro was stronger at $1.1289. Ahead of New York’s opening gold was trading in London uncertainly, at $1,281.00 and in the euro at €1,135.69.
The silver price closed at $17.89 down 41 cents. Ahead of New York’s opening it was trading uncertainly at $17.90. It seems to want to fall quickly while the gold price is below $1,300.
There were purchases of 1.792 tonnes into the SPDR gold ETF as well as a purchase of 0.30 of a tonne into the Gold Trust on Monday. The holdings of the SPDR gold ETF are at 743.438 and at 167.84 tonnes in the Gold Trust. There was physical demand in the U.S. so the fall in the gold price is not on physical sales. Usually, when this happens, speculators and traders cannot hold the gold price down.