Chris Poindexter
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Gold surged in early U.S. trading yesterday as word of a deal leaked out that Greek leaders agreed to terms for a bailout deal. 

The price of gold spiked $15.80 to $1,747.80 and silver jumped another $0.36 to $34.24. 

Equity markets jumped on the news, along with the surge in gold and silver prices.  Gold vaulted more than 1 percent in just a few minutes as the euro surged on the news and the dollar lost ground in currency markets. 

While Europe breathes a giant sigh of relief that Greece is finally on board with a deal that the major parties said they would support, I would like to remind everyone that this is not the first time we’ve seen a deal reached with Greece, only for one party or the other to later back out. 

Balancing the good news from overseas, PepsiCo announced today it was cutting 8,700 jobs, roughly 3 percent of its global workforce, as part of a plan to save $1.5 billion in costs.  There was no word on how many of those jobs are in the U.S.

Federal officials also just announced a $25 billion dollar settlement with mortgage servicing companies.  Under the deal California will get more than $12 billion to slash debt for distressed homeowners and to encourage short sales.  

So, good news is busting out all over, except at PepsiCo, but that will set up an eventual return to fundamentals for precious metals.  Provided the Greek deal holds together, that will likely mean a return to a risk on investment mentality in Europe and a continuing rebound for the euro. 

If the euro continues to gain ground, then expect gold prices to continue higher.  I’m a bit skeptical the euphoria is going to last as Europe’s debt problems go deeper than one small country.  They’re throwing an awful lot of money at the problem, far more than they could afford to do for other countries in the same circumstances.  

Personally, I’m sitting on the sidelines until things calm down.  Most of you know by now that I’m not a big fan of volatility, whether it’s good or bad.  It’s going to take markets the rest of the day to digest all the news and settle on a direction.  

When it comes to Greece, the deal isn’t done until the riots are over.  Plenty of time for one of the opposition parties to change their mind and back out of the deal at the last minute.  It’s going to be interesting the next few days.  Stay tuned. 

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Chris Poindexter

Chris Poindexter is a senior writer for National Gold Group.