The economies of Europe are in poor economic health. In the first quarter of 2013 overall growth within the Eurozone was negative for a sixth consecutive quarter and it is forecast to contract by 0.6% this year. Meanwhile the UK managed to avoid a triple-dip recession but inflation is still above target, and unemployment remains stubbornly high.
This article is reprinted from New Daily Insights – BCA’s first interactive service. Launching Monday, May 13, 2013, the service will include several new and important features: Insights, Inside BCA, Ask A Strategist and Polls.
There is a new campaign to end austerity. First, the IMF lets it be known it has second thoughts about it; then we are told the threshold of 90% government debt to GDP which must not be crossed, set by Professors Reinhart & Rogoff, is based on an excel spread-sheet error. Lastly, Bill Gross of PIMCO, the largest bond fund in the world, tells us austerity is not working.
Had those with money tied up in the Cypriot banking system owned gold instead, they might have been able to watch the unfolding crisis relaxing on the beach. So why isn’t gold going through the roof? Is Cyprus too small to matter? Can it happen in the U.S.? Should investors hold gold?
So you’ve got this pile of cash and you’re not sure what to do with it. Nice problem, as problems go, but definitely not trivial, especially if you’re more concerned with keeping what you have than trying to make it grow.
U.S. dollar gold prices fell back below $1600 per ounce Monday morning in London, falling back towards where they started last week, as stocks and commodities gained after news that Cyprus has agreed a bailout deal.
Niall Ferguson believes that individual property rights are responsible for turning a bunch of ignorant, “malodorous” Europeans into the world’s dominant culture. That is why the proposed violation of such rights in Cyprus is sending shock waves through the global financial system.
The dollar gold price hovered just below $1610 an ounce Thursday morning, while stocks and commodities fell along with Euro as disappointing economic data was added to news that Cyprus’s banks will remain closed until next Tuesday.
The gold price continued to hold above $1600 per ounce in Asian and early London trade on Tuesday, easing back from Monday’s 3-week high as world stock markets struggled again amid fresh uncertainty and rumor over Euro-member Cyprus’ banking crisis.