EU Leaders Hail Sticking Plaster ‘Rescue’ As Victory

Today’s AM fix was USD 1,593.00, EUR 1,264.79, and GBP 1,023.45 per ounce.
Friday’s AM fix was USD 1,576.00, EUR 1,264.34, and GBP 1,021.72 per ounce.

Silver is trading at $28.67/oz, €22.92/oz and £18.52/oz. Platinum is trading at $1,448.00/oz, palladium at $618.00/oz and rhodium at $1,200/oz.

Gold rose $3.00 or 0.19% on Friday in New York and closed at $1,594.60/oz.  Gold traded sideways in Asia and is hovering above $1,590 in a narrow range in Europe this morning.   
  
Spanish Prime Minister, Mariano Rajoy, watches  Euro 2012 group C match between Spain & Italy- Photograph: Jasper Juinen/ Getty Images (Gdansk, Poland)

Gold climbed on Monday, on news Saturday that Eurozone finance ministers will help bailout Spain’s banks’ lending 100 billion euros ($125 billion). This helped strengthen the euro and riskier assets, and hurt the dollar.

This action drove US gold futures up 1.1% to $1,609.30 for August delivery. It saw money managers increase their US gold futures up 27% to 98,426 contracts in the week ended Jun 5th, the biggest jump since September 2009.  Silver longs also climbed up 1/3 to 6,549 contracts from 4,912 the previous week.  Spot silver reached a daily high of nearly 2% to $29, before edging down to $28.89.

The loan to Spain will actually bring the grand total for bank bailouts to $600 billion when Ireland, Portugal and Greece are added.

EU politicians are again attempting to portray Spain’s €100 billion ‘bailout’ as a victory.

It is nothing more than another short term misguided panacea and a mere sticking plaster on the gaping terminal hole as only the Eurozone debt crisis could.

“Money printing on this scale has only ever been good for precious metal prices by historical precedent. The bank bailouts are an example of money creation at the source with banks able to lend more against this new capital injection and sterilising bad debts,” comments Peter Cooper.

Risk has again been shifted from insolvent banks to increasingly insolvent sovereigns. While equities have rallied, the robust gold price is an indication that market participants remain dubious.

Stephen Flood

Stephen Flood is the CEO of GoldCore. He is a former Wall Street equity trader and FinTech expert. He has been involved in the precious metals markets since 2004 and has appeared as an expert contributor on CNBC, CNN, BBC, RTE & Bloomberg TV and has had articles published in the Irish Times, Irish Independent and The Sunday Business Post.

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