Articles
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What the Greek bailout means for gold and silver
Some investors may feel that the Eurozone debt crisis has been resolved by the bailout from the other E.U. members. Whether it has or has not, is irrelevant to the price of gold, or is it?
There are still hurdles in the way, such as the acceptance by private Greek Bondholders of the 53% haircut and low interest rates they will get until 2015. But let’s assume the best and believe they’ll accept the terms. The first market reactions were to move up and hold new levels without any effervescence in any market. The moves had largely been discounted already. Yes, we’re seeing a shift of money from the U.S. Treasury market to the euro but not in large amounts yet. In this piece we look at the overall prospects for the precious metals.
Greece: What Remains?
One can spin the story any which way, but the cold reality is as follows:
Greece has defaulted on its debt and has had the entire debt situation re-worked in the light of its default.
Greece’s economy is moving, if not already there, into a Depression (so far statistics record a 7% contraction of their economy and this continues to shrink). This means that government revenues are also shrinking rapidly. The national pastime of Tax evasion is expected to be spurred by this.
The interest rate on the debts, at 121% of current Gross Domestic Product, while at 2% on the remaining debt, may swamp government revenues. Greece will need international aid to avoid bankruptcy despite this package
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