Gold extended losses Thursday as Greece say’s it will run out of money in one week a midst other reports that the U.S. is sending A-10 tankbuster jets to Europe after Germany said, “a large scale war could develop. Gold last reported a.m. is $1199.70 down $9.90 and silver is $16.37 down 6 cents.
Greece said it will be submitting a request to the euro zone on Thursday asking for an extension on a loan agreement for up to six months but heavy opposition to any new agreement is coming from Germany. German Finance Minister Wolfgang Schaeuble is pouring fuel on the fire by stating, “It’s not about extending a credit program but about whether this bailout program will be fulfilled, yes or no.”
Greek Prime Minister Tsipras said talks are at a crucial stage as the current bailout is due to expire on February 28. Tsipras claims rally’s across Europe supporting moves made by Greece have strengthened the countries resolve to stand firm against austerity. The Swiss Franc is falling today and it and it appears the country remains in a catch 22 situation. Greece cannot re-pay its debt if it stays in the EU and if it exit’s it cannot stand on its own legs financially.
Germany and other member countries are insisting there will be no roll-back of reforms already implemented under the current bailout. According to rhetoric,Greece is going to pay back every dime, or else. Concerns over investors withdrawing money from banks may force Greece to implement capital controls or “bank Bail-ins”, if no deal is reached. Greek retail gold purchases are up around 122 percent compared to this time last year. Great concern over a possible currency collapse will continue moving investors into physical gold and silver.
Europe is fearful that a large scale war is likely unless the U.S. backs off of its sanctions strategy attempting to demonize Russia over Ukraine. German lawmaker Carl Georg Wellman said Germany won’t be able to halt U.S. weapons to Ukraine to fight Russian supported separatists. Germany is tip-toeing between Russia and Washington while it seeks to avert war as Russian nuclear missiles could hit Berlin within minutes if a large scale war is launched.
Washington is sending 12 A-10 Thunderbolts to Spangdahlem Air Base Germany as a show of force against Russia’s intervention in Ukraine over the past year. Interestingly, U.S. sanctions remained quite trivial last year until Russia made its intentions known that it would bypass the U.S. dollar in energy trades. Make no mistake, these actions are in defense of the dollar and protecting its reserve currency status, not about defending Ukraine.
Gold Goliath remains pro silver again for 2015 as silver industrial demand will increase sharply throughout this year and forward. Stronger silver demand in the U.S. and Asia are key factors in driving growth in global markets. Emerging markets like India and China will be important factors as well. Silver has been in extreme demand and as inventories dwindle is poised for a bull market.
Investors can still purchase silver well below production costs. We can only speculate as to how long mining companies will continue producing silver at negative returns but common sense tells us it won’t go on indefinitely.
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