In the comments section of an earlier article, “Cashless” writes …
It’s not just Greece. In fact, bailing out all the countries in serious trouble and their banks could carry a price tag as high as $3 trillion, according to some estimates. Creating all that money would be bullish for the price of gold. That’s why Europe is now ordering its banks to create a “firewall” that can leverage up to $2 trillion. Will it be enough?
In any case, the banks don’t sell gold to raise money. That’s the power of the printing press — they just create money. I hope that answers your question.
But let’s say Greece leaves the European financial union. I’d say the people in Greece (11.2 million of them) will probably be buying gold hand over fist before that happens. However, throwing Greece out — and maybe Italy and Portugal, too (Spain and Ireland — you’re on notice!) might strengthen the euro. So, after the initial panic, we could see gold head lower again, at least in euro terms.
To be sure, there are a dozen different scenarios that could unfold. I think most of them are bullish for gold, but some could certainly drag on gold, for a while, anyway.
One more thing — Gold has rallied recently, but is at an inflection point now. I could make you a chart, but Chris Kimble already did …
For a full-sized chart, and Chris’s original article, point your web browser here: http://bit.ly/roEJwd
Will gold continue to power to the upside? Or is it headed lower in the short-term? Stay tuned. Long story short, there’s more at work here than Greece.
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“Sean, I am wondering what happens to the price or gold when (not if) Greece defaults in early November. Part of me says that the price will test the 1900s again due to fear and the need for security. This will cause gold to rise since demand exceeds supply. Part of me says that most of the European Banks will have to sell gold hand over fist to meet the probable run on the bank by depositors, the need by the central banks to protect their currency and the huge and rippling haircut the bond holders will face. This will cause gold to fall since supply exceeds demand. I can see either scenario. Any thoughts?”Cashless, that’s a great question. Europe isn’t alone in facing a crisis in November, by the way — in fact there are many who say the upcoming U.S. budget battle in November will make the one in September look trivial – but the situation for the euro and gold is perplexing because A) we’re not sure what the euro governments will do and B) we can’t know how the markets will react to it. Here’s what we do know.
It’s not just Greece. In fact, bailing out all the countries in serious trouble and their banks could carry a price tag as high as $3 trillion, according to some estimates. Creating all that money would be bullish for the price of gold. That’s why Europe is now ordering its banks to create a “firewall” that can leverage up to $2 trillion. Will it be enough?
In any case, the banks don’t sell gold to raise money. That’s the power of the printing press — they just create money. I hope that answers your question.
But let’s say Greece leaves the European financial union. I’d say the people in Greece (11.2 million of them) will probably be buying gold hand over fist before that happens. However, throwing Greece out — and maybe Italy and Portugal, too (Spain and Ireland — you’re on notice!) might strengthen the euro. So, after the initial panic, we could see gold head lower again, at least in euro terms.
To be sure, there are a dozen different scenarios that could unfold. I think most of them are bullish for gold, but some could certainly drag on gold, for a while, anyway.
One more thing — Gold has rallied recently, but is at an inflection point now. I could make you a chart, but Chris Kimble already did …
For a full-sized chart, and Chris’s original article, point your web browser here: http://bit.ly/roEJwd
Will gold continue to power to the upside? Or is it headed lower in the short-term? Stay tuned. Long story short, there’s more at work here than Greece.
source
