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Bullion Report: Gold Boom

Discussion in 'Stock Market News & Analysis' started by gajoinvest18, Jun 9, 2011.

  1. gajoinvest18

    gajoinvest18 New Member

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    One Country's Crisis, Another's Gold Boom

    It seems that the economic troubles are not completely behind us. Various nations are grabbing headlines as their debt gets deeper, and it doesn’t look like there is any true relief on the horizon. Weakness is rippling through the global economy despite several attempts at stimulus. The situation seems to be escalating, poised for even greater troubles, and that is spinning into fears that are helping investors take a second, third, and fourth look at precious metals.

    [​IMG]
    Past performance is not indicative of future results.
    **Chart courtesy of Gecko Software

    News story headlines keep rolling in regarding the debt crisis in Greece. The trouble isn’t that Greece is at risk of an apparent default, it is the fact that they aren’t the only country in trouble. Portugal, Spain, Ireland – these are just a few of the nations that have seen an equally dismal outlook. Moody’s Investor Services, the company that provides ratings and risk management advisory services, has been eyeing several places for possible credit downgrades. Just this week, Moody’s dropped the **** that debt in Catalonia will be credit negative for Spain, adding to the idea that financial fragility is rife across the Euro zone. Greece is currently looking to rollover its debt, a move that Moody’s says is akin to default. Fitch Ratings takes the same view, arguing that any arrangement in which the holders of Greece’s debt take voluntary losses or “less advantageous” terms is still default from their point of view.

    Troubles with debt are not limited to countries across the pond. The US is struggling too - at least that’s what the hullabaloo about the debt ceiling has been. Standard & Poor’s already downgraded the outlook for US debt, arguing that it is unlikely lawmakers will be able to wrestle down the huge deficit. Last week Moody’s warned that they are about to do the same thing. They want to see Congress increase the debt limit in the “coming weeks” or they will pull the sterling credit rating. What does all of this really mean? If all the major economies in the world are fumbling towards default, then it is hard to make a case for any of them in terms of investment.

    There used to be a strong tendency for investors to look for havens amid troubled times. The trick nowadays is determining what fits that bill. Low-interest currencies? The US dollar and yen appear too unstable nowadays for that kind of assessment. Real estate? It should go without saying that all the old rules of thumb for this one are out the door. Tried and tested names in stocks? A global recession, especially a potential double dip one, is likely to change the way we look at everything - including some of the “institutions” of investment. Precious metals? Absolutely. Finite and without links to government manipulation (not in terms of blatant policy settings, that is) precious metals like gold and silver are apparently offering the last port in the great financial storm of this century.

    [​IMG]
    Past performance is not indicative of future results.
    **Chart courtesy of CBOE.com

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