It’s Greece, again. This time the Greeks are ignoring deadlines to respond to demands that the government in Athens implement tough wage and pension restrictions as part of the deal to secure another $130 billion euro bailout. Remember the days when the only times you ever heard about Greece were in relation to beaches, colorful seaside villages, and all night parties? I miss those days.
Commodities, including precious metals, hit the skids in overnight trading with gold down $13.37 to $1,717.53 and silver down $0.16 to $33.48. Joining gold and silver on the slide were crude oil, platinum, palladium and copper.
Equities futures on U.S. markets swooned on the news from the other side of the Atlantic as well, threatening to start the week lower. Not that the markets here weren’t already looking for a reason to correct after big gains last week. Since Greece really doesn’t hold that much sway over the U.S., I’m going to guess the turmoil there is merely a convenient excuse for profit taking.
Honestly, I think the fears of Greece leaving the European Union are overblown and I wish they’d just get on with the inevitable; just because the EU started out united, doesn’t mean they have to stay that way.
While the Europeans play economic ping pong with Athens, central banks in emerging markets are quietly adding to the global demand for gold by turning to the shiny metal as a hedge against global economic instability. Adding to the central bank demand for gold is unusually high retail demand from India and China.
The strong demand for gold as a counter-balance to the global turmoil should not be a surprise to anyone and expect that the continued demand will keep prices in the $1,700 an ounce range for the indefinite future. The price range for gold could modulate upward if the Federal Reserve announces another round of easing.
Silver may see increased volatility in the weeks ahead, so use any sudden drops in price as an opportunity to increase your holdings, particularly any days where gold and silver split.