Gold opened lower on Monday against a stronger U.S. dollar index. An interesting note comes from analysts at Morgan Stanley this morning. Analysts believe despite, “Global Quantitative Easing combined with uncertainty in the EU and increased gold demand is Asia”, that gold prices will fall over the next two years as investors leave the market. The Global Asset Team say’s negative rates will continue to drive flow into USD credit supporting dollar strength.
While anything is possible, analysts are not taking into consideration a growing trend where countries appear to be hedging themselves against the dollar in favor of China and its new Asian Infrastructure Investment Bank. While the U.S. dollar may be around for many years, the current monetary shift is undeniable. Gold last reported a.m. is $1195.00 and silver is $15.95.
Greece has ordered all state bodies to transfer cash reserves to the central bank as it see’s little hope in striking a deal with the EU and IMF. The government is citing “extremely urgent and unforeseen needs“, which will also apply to local government bodies.
Reuters reports, Monday’s decree excludes pension funds and some state owned firms. Cash reserves that are needed by these bodies for their immediate payment needs are also excluded from the new regulation. Greece must pay the International Monetary Fund almost 1 billion euros in May. Despite new measures, most estimates see Greece running out of money by possibly mid May.
Negotiations between Greece and its EU creditors remain at a standstill even as IMF chief Poul Thomsen say’s, “There’s been a little more impetus on negotiations between the three institutions and the Greek government for several days.” Thomson believe’s Greek finances may perhaps last until June but also admits the burden of repayments coming up for Greece is very big. Unless an agreement is reached beforehand, Greece will default. Either the IMF and EU agree to keep bailing out Greece with loans it will never repay or they let them exit for closer ties with Russia and China.
France’s central bank chief Christian Noyer said, “At some point Greek banks are likely unable to offer enough collateral to access refinancing even for emergency liquidity.” Noyer admits the end game for Greece and the EU may be quickly approaching but Greece would suffer far more than the EU because of fundamental problems of growth and unemployment.
Greek economic conditions are indeed deplorable but Mr. Noyer would be wise to remember there are tens of trillions in derivatives propping up EU banks. Greece may be the igniter that implodes the EU banking system.
Contact Gold Goliath and protect your IRA with real physical gold and silver. U.S. stock markets would have imploded years ago if the Fed would not have bailed out Wall Street protecting its own interest. How long do we have before our “debt can” reaches the end of the road? China, may bring it sooner than we would like to think.
Gold Goliath is not your typical gold dealer.