Gold Robust Over $1,500 as Stagflation Deepens and Greek Default Risks Eurozone Break Up and Financial Contagion

Gold is trading at $1,517.80/oz, €1,051.33/oz and £925.09/oz. 

Gold is tentatively higher this morning with the British pound, yen, Swiss franc and dollar showing weakness. Greek German 10 year bond yields have surged to euro era record highs and the Greek 10 year bond has surged to a new record high of 17.146%.

The euro has remained remarkably stable, so far, but euro gold at €1,052/oz remains near (3.4%) record highs of €1,088/oz.

Bloomberg European Crisis Monitor

Gold is consolidating above $1,500/oz after rising from just over $1,400/oz at the start of the year to a record nominal high of $1,567/oz. The real risk of a Eurozone break up and the likely financial contagion that would result is supporting gold prices and is one fundamental factor likely to lead to further safe haven demand for gold in the Eurozone and internationally.  

Credit Suisse has said that gold may rise above $1,550/oz in the next few days and a close above that level “would be important”.

Cross Currency Rates

Stagflation Threatens Major Global Economies – Inflation in China at 5.5% and UK at 4.5%

Another fundamental factor supporting gold prices and likely to lead to further gains are the increasing signs of stagflation in major global economies. UK inflation data released this morning shows that inflation remains high at 4.5%. 

The Bank of England expects inflation to reach 5% later this year prior to falling but the Bank’s credibility is increasingly strained as inflation has now exceeded the BoE’s target of 2% for 34 of the last 40 months. 

British savers and pensioners are suffering from negative real interest rates and this continues to make gold an attractive diversification from a devaluing pound.

Gold in British Pounds – 180 Days – (Daily)

Meanwhile in China, inflation has risen to 34 month highs at 5.5% as food price and energy inflation deepens. Lending has fallen and China’s money growth has fallen to a 30 month low. Overnight, China upped its bank reserves to try and contain inflation.

 

Gold in Yuan/ Renminbi – 1 Year (Daily)

The Chinese have experience of currency devaluation and even hyperinflation and are aware of how paper currencies can be debased and lose purchasing power. Serious inflation in the past has sparked rioting and social unrest and is doing so again today as seen in many riots throughout China (particularly in the South) in recent days. 

There appears to be a gathering “perfect storm” of deepening inflation, slowing economic growth and double dip recessions, stagflation, sovereign debt crisis in many major western economies and the risk of sovereign and banking contagion.

This will see gold supported in the coming months and the inflation adjusted high of $2,400/oz remains a viable long term target given these fundamental risks.

SILVER
Silver is trading at $34.74/oz,€24.07/oz and £21.17/oz.

PLATINUM GROUP METALS
Platinum is trading at $1,791.70/oz, palladium at $796/oz and rhodium at $1,925/oz

NEWS

(CNBC) 
US Is in Even Worse Shape Financially Than Greece: Gross

(Reuters) 
PRECIOUS-Gold bounces after 1 pct fall; jewellers buy

(Bloomberg) 
Gold Snaps Two-Day Drop on Inflation Concern, Greek Sovereign-Debt Crisis

(MarketWatch) 
Gold, silver advance in electronic trading

(Wall Street Journal) 
Impasse Leaves Belgium Without Government One Year After Elections

COMMENTARY

(Financial Times) 
The eurozone heads for break up

(The Telegraph) 
Opec’s Vienna summit meant nothing for long-term oil price trends

(Mineweb)
Silver in China could turn out to be the new gold

(ZeroHedge) 
Exclusive: In Q1 Bernanke Spurred Inflation By Successfully Offsetting The Ongoing Collapse Of The Shadow Banking System

(The Christian Science Monitor) 
Is the Fed manipulating the stock market?

Mark O'Byrne

Also on news-goldcore-com

Videos

Tavi Costa- The Fed is Trapped

Silver Market Predictions – Ed Steer Talks about the Silver & Gold Price

Are We In A Financial Bubble? Peter Grandich Interview

Blog posts

Lawrence Lepard – Living in a World with Inflation

Lawrence Lepard Portfolio Manager and advocate of sound money, is our guest on this episode of GoldCore TV. With 40% of money in the US being created in the last 2 years, we ask Lawrence if the Fed is trapped. If so will this mean that it is going to be very difficult for them […]

READ MORE

Supply Chain Crisis Effects on Gold & Silver

The broken chain – could the supply crunch be worse than the oil crunch of the 1970s Anyone that has bought a new or used car in the last year has faced higher prices and long wait times for delivery. This is all because of the very small but essential semiconductor, which is in short […]

READ MORE

This is a Long Term Bullish Pattern for Gold – Gareth Soloway on GoldCore TV

“This is a long term bullish pattern for gold!” – Gareth Soloway Gold In this latest episode of GoldCore TV, Gareth Soloway joins Dave Russell to discuss what what the charts are suggesting for the stock markets, bond markets and #bitcoin. In addition to this he also takes a look at his gold price forecast 2021 and beyond.Gareth identifies the key levels that […]

READ MORE

Featured

Gold, the Tried-and-True Inflation Hedge for What’s Coming!

READ MORE

How High is Too High for Rising Government Bond Yields?

READ MORE

Silver – 7 Reasons it is Still Set to Soar

READ MORE
Newsletter
Category
Archives
Popular

No posts available

Videos

Tavi Costa- The Fed is Trapped

Silver Market Predictions – Ed Steer Talks about the Silver & Gold Price

Are We In A Financial Bubble? Peter Grandich Interview

Blog posts

Lawrence Lepard – Living in a World with Inflation

Lawrence Lepard Portfolio Manager and advocate of sound money, is our guest on this episode of GoldCore TV. With 40% of money in the US being created in the last 2 years, we ask Lawrence if the Fed is trapped. If so will this mean that it is going to be very difficult for them […]

READ MORE

Supply Chain Crisis Effects on Gold & Silver

The broken chain – could the supply crunch be worse than the oil crunch of the 1970s Anyone that has bought a new or used car in the last year has faced higher prices and long wait times for delivery. This is all because of the very small but essential semiconductor, which is in short […]

READ MORE

This is a Long Term Bullish Pattern for Gold – Gareth Soloway on GoldCore TV

“This is a long term bullish pattern for gold!” – Gareth Soloway Gold In this latest episode of GoldCore TV, Gareth Soloway joins Dave Russell to discuss what what the charts are suggesting for the stock markets, bond markets and #bitcoin. In addition to this he also takes a look at his gold price forecast 2021 and beyond.Gareth identifies the key levels that […]

READ MORE

Featured

Gold, the Tried-and-True Inflation Hedge for What’s Coming!

READ MORE

How High is Too High for Rising Government Bond Yields?

READ MORE

Silver – 7 Reasons it is Still Set to Soar

READ MORE