the fear will be the contagion spreads to a major economy like Spain, risk appetite will decrease ($A down today) I would expect Gold to benefit greater than silver but with the $A dropping both metals will become more expensive.
The Greeks were buying up a lot of gold sovereigns at the beginning of the crisis, paying many times over the spot price just so they could convert their savings out of the Euro into gold. With two World Wars, occupation and one period of Hyperinflation in the not too distant past they know what to do. Any more talk of going back to the Drachma?
News article on Greece. http://www.smh.com.au/business/world-business/greek-unrest-could-topple-pm-20110616-1g4gs.html
For sure, their fashion sense when it comes to gold jewelry tends towards the chunky side too, big (almost obnoxiously big) rings and lots of them as well as the ubiquitous gold crosses. That way you get to carry it with you in case you need to move fast!
hey Jiz, I read an article regarding Argentina during the their hyperinflation in the 90's and the gold that was most tradeable was small jewelery items such as rings and earings. Having 1 oz coins and 10g bars was useless as no-one could afford them.
I have a collection of hyperinflation banknotes but I have yet to pick up any from Argentina, it's not that they are rare or expensive, it's just that there are so many of them, complete with overprints and changes to the units of currency, no wonder people feel more at home with something that didn't change, could you imagine if your gold jewelry suddenly shrank in half and then turned to copper? The perils of fiat!
Was watching the protests in Greece last night on utube. Hope they all changed their fiat onto pm's before they headed down to protest. S is gonna HTF very soon and its not looking good. I'm quite surprised its held up this long considering how long and how often these protests are occurring there. LONG LIVE THE RIOT DOG!!!!!
BBC News Europe 15 June 2011 Last updated at 13:54 GMT Gavin Hewitt Article written by Gavin Hewitt Europe editor Debt-laden Greece mired in anger and humiliation The Greeks are being humiliated. Their frequent protests have an air of futility about them. Their fate is being decided elsewhere, by unelected officials from the EU or the IMF. Comments at today's protests in Greece oscillate between rage and despair. One demonstrator spoke of a country "being torn to pieces". The IMF and EU send in accountants and economists who occupy space in the finance ministry. When it comes to selling off state assets - intended to raise 50bn euros (44bn; $72bn) - there is debate as to whether this should be overseen by a non-Greek body. It would have been the final humbling. There were suggestions, too, that foreigners should run Greek tax collection. Those ideas may have been sidelined but the resentment has not gone away. Some say that Greece has become a protectorate of the EU. Certainly the intervention from outside in Greece's internal affairs is unprecedented. The Greek Prime Minister, George Papandreou, flies off to meetings to learn the terms of his surrender. He had promised no more cuts, but in return for Greek Bail-out II he will have to take the axe to public sector jobs. Further spending cuts of 6.4bn euros - that was the condition set by the EU and IMF in exchange for more aid. State assets are being sold off. The crowds shout "we won't sell!" - but that's precisely what the government has been told to do. Partners losing patience Many of the details of the next round of cuts are yet to be revealed. If Greece fails to meet the IMF terms then the Dutch, Germans and Finns might refuse a second bail-out. Mr Papandreou says "we are in the middle of an ongoing battle. We will not surrender." But increasingly the people are not with him. The polls indicate a steady decline in his support. Today the protesters wanted to stop MPs reaching the parliament building. Perhaps in jest, but stinging nonetheless, German and European officials have spoken of Greece selling off its islands. The pain might have been endurable if it had worked. A year after Greek Bail-out I (worth 110bn euros) Greece has seen industrial production slump by 11%. Unemployment is up to 16%. The number of Greeks out of work is up 40% from a year earlier. And the debt mountain has ballooned - heading towards 153% of GDP. And here's the worst aspect of all of this. The Greeks are about to get another tranche of money. That will only add to the debt. And it is hard to find a serious economist who doesn't believe that the strategy is to kick the can down the road. Default looms. Maybe not this year, but almost certainly in 2015. For European officials the hope is that by then the banks will be more resilient to take a hit. Certainly well-respected German economists don't expect to get their money back. But in the meantime there is a human cost. The social services organisation Klimaka runs a food kitchen that feeds 3,000 people a day - many are now from the middle classes. There are 30 calls a day to its suicide line. Some, like former Prime Minister Stefanos Manos, warn of a social explosion. And if the Greek people simply refuse to accept further austerity then default looms. Pressure on Papandreou How did we get here? Greece was seduced by the low interest rates that followed joining the euro. It took on too much debt. When the crash came it found itself with debts it couldn't handle. The euro has proved a disaster for Greece. There are plenty who point a finger at Greece itself. It faked its own accounts. Wide-scale tax evasion. A rigid job market. A bloated public sector. Early retirement. There is some truth in all of those accusations, but what ordinary Greeks can't see is how the present policies offer a way out. If it looks unlikely that George Papandreou will get his austerity measures through parliament then he might go for early elections or even gamble on a referendum. It is still possible that there is a silent majority who support spending cuts and state privatisations. But Greece is a wounded country and popular opinion cannot be counted on.
Papandreou is so crooked. He basically sold his own country down the river. He should be in prison. The Greeks really are an admirable bunch. How vocal they are! I love it. Has there been any mainstream coverage of the protests?
That is the positive view. The more negative view is that the domino effect of a Greek default will impact credit markets around the world and coupled with the loss of risk appetite, the loss of liquidity will dry up global demand and prices will fall in a similar way to the post-Lehman crash. But no one really knows what half-baked, dumb-arsed measures the governments of the world will take to try to maintain the status quo this time around, so it is impossible to really tell what will happen in such an event. One variation on the 2008/09 experience could be the impact on Australian Banks not having access to global sources of capital to continue lending or to refinance local debt obligations which could be really devastating to any over leveraged enterprises or business sectors (commercial real estate for example). In that instance, it would be foreseeable that Gillard will go a step or two beyond Rudd's Bank guarantees and start tapping local sources of funds to avoid the Banks realising any pain. At which point we are really going to be in trouble, because Rudd already spent all our cash reserves, leaving Julia and Bob no option than to pursue us more directly. I mean, they could take no action, let everyone that is over leveraged and selling debt take it on the chin and leave mum's and dad's out of it, but she won't. She will be compelled to do something to make matters even worse for the middle-classes and will presume to lump us all in together as being responsible for "fighting" the effects of GFC-2 and commence new and morally corrupt programmes to steal more of our savings and tap more of our cash-flow.
I know I'm possibly taking you out of centext but this statement I think highlights our lack of understanding of how a blow out will occur. If the government allows the whole box and dice to fall - it will be the mums and dads that take the brunt - they cant be left out of it. As an example. A good friend of mine runs a smallish manufacturing company in country Vic. His products are chemically based and while he imports stuff (loves the high dollar) he onsells the product to other manufacturers in Australia who use the refined product to make their products to sell overseas (they are hurt by the high $). Because his customers are suffering, he currently has cashflow problems. He approached his bank and a couple of others about getting some funds (rightly or wrongly but this isn't my point). The banks refused and so he has put off 21 of his employees. Yes - he has suffered but the dads in this case are a hell of a lot worse off as they are now unemployed, are generally considered unskilled workers and have only a small chance of picking up employment in the area. He certainly won't lose his house or suffer too much other than his ego and wife wont be able to spend as much - but the guys he has sacked have lost a lot more and some will lose their houses. I'm making him sound like an uncaring monster which is certainly not the case. He is doing everything he can to find these guys employment both within his company and through his extensive network of contacts (which is how he came to tell me). He really feels for these guys as a couple of them he has employed for many years and they and their families have grown up together. My point is just that - as per ususal - no matter what happens - generally the people suffering will be the mums and dads. Not the people who have streched to far. malachii
Gino, I think your comment about loss of appetite for risk really is the key. The loss of liquidity has been caused by the banks themselves. Hoovering up any spare cash they can and hoarding it. For example, essentially there was little to no effect of the '08 GFC in this country. The country remained prosperous and the confidence in the future lead to a shift from private savings to speculation in an astronomic real estate bubble, with the banks holding all the cards. Not only do they (the banks) own all the assets as mortages on their balance sheets, they now also hold obligation on half of the income stream of all their debtors. How can there be a liquidity problem when they have that amount of money pouring in? Because even with the billions of dollars cash pouring in (which is effectively just what people used to deposit in these same banks as 'savings deposits) and all of the nation's real estate wealth (lets not kid ourselves how much debt-free realestate isn't being leveraged these days!?) the banks aren't confident enough to lend capital to keep the system rolling. The banks are now communicating to the market (by this hoarding) that they have no confidence in the future. And that's in a country that didn't feel the GFC! Imagine what the European banks will be thinking!?
Greece is not that different to other countries in the Eu. I see symbolism and the illuminati are occultists striking at the ancient cradle of democracy.
Quote from Kitco News) - How the situation in Greece unfolds over the coming days could influence the precious metals market into next week, market participants said Friday. As Greece teeters on the brink of default and civil unrest rises in the country over sharp spending cuts, gold has seen some safe-haven buying emerge as investors flee riskier assets. Meanwhile, other precious metals with industrial ties such as silver and the platinum group metals have faltered as investors move from risk and from concerns about reduced global growth increase amid disappointing economic data. .............................. Lots more at http://www.kitco.com/reports/KitcoNews20110617DeC_outlook.html
