EU Debt Contamination Deepens In Greece, Portugal And Ireland - Gold Just 2% From Record Nominal High

Tyler Durden's picture

From Gold Core

Gold and silver are flat in US dollars but higher in euros this
morning. Trade is thin with the UK and US markets closed for spring
holidays. Gold and silver were 1.75% and 8% higher last week and the
precious metals and especially gold appear to be on solid footing due to
the continuing debt crisis in Europe and concerns about a slowdown in
the US and global economy. 

Cross Currency Rates 

Despite gold being only some 2% away from the record nominal highs
seen at the end of April ($1,563.70/oz), sentiment remains lackluster at
best with little or no coverage of gold in the international financial
press and media over the weekend. 

Gold Bullion in US Dollars – 60 Days (Daily) 

Speculative sentiment remains highly muted with the investment public
not participating in the gold market. Indeed, the majority of the
public’s only experience of the gold market is when they have
imprudently sold their gold jewellery to the thousands of new cash for
gold merchants seen globally. 

There are a tiny minority of more risk averse individuals and people
who understand the importance of gold as a form of financial protection
who continue to allocate funds to gold. 

In the last two weeks we have experienced a lot of sell orders and
the ratio of sell to buy orders has been the highest since our
foundation in 2003. Value buyers emerged last week but much of the
buying was by existing clients adding to their holdings. 

The threat of sovereign default and contagion increases by the day. 

Greece is facing the threat of further severe austerity measures and a
plan for unprecedented outside intervention including in the collection
of tax and wholesale privatization of Greek state assets. The severity
of the plan and the fact that it would in effect spell the end of Greek
sovereignty and a forced move towards a European fiscal union may lead
to its rejection by opposition Greek parties who may seek a fairer

Portugal Government 10 Year Note – 2 Years (Daily) 

Greece is just one of the sovereign debt crisis facing the Eurozone.
Portugal and Ireland are bracing for debt crisis contagion to reach
their shores and in both countries the crisis is deepening. 

Portuguese bonds have come under heavy selling pressure again this
morning with 10 year bonds rising to 9.822% and two-year note yields
were 21 basis points higher at 11.53% this morning. The spread or yield
difference between German 10-year bunds and Portuguese securities of a
similar maturity widened to a record over 678 basis points in London
this morning. This is the highest since Bloomberg began collecting the
data in 1997. 

Ireland Government Bond – 10 Year (Daily) 

In Ireland, Transport Minister Leo Varadkar sparked alarm and confusion
over the weekend when he said the government may need further funding
from the European Union and IMF next year as Ireland will be shut out of
bond markets for 2012 and possibly even in 2013. 

Irish 10 year bond yields surged over 11% last week and remain over 11% at 11.07% this morning. 

Punitive “bail outs” have clearly not worked and have simply managed
to transfer massive debts from profligate banks to western nations
taxpayers who were already struggling with very high debt levels. 

A continuation of these misguided policies makes a second more
dangerous phase of the global debt crisis increasingly likely and means
that diversification into gold remains prudent and safe haven demand for
gold will remain robust for the foreseeable future. 


Gold is trading at $1,536.10/oz, €1,075.62/oz and £932.95oz.


Silver is trading at $37.97/oz, €26.59/oz and £23.06/oz.

Platinum Group Metals

Platinum is trading at $1,798.20oz, palladium at $756/oz and rhodium at $2125/oz. 


(Bloomberg) -- Silver Futures Climb, Gold May Advance on Europe Debt, Inflation Concerns 

(MarketWatch) -- futures fall, but silver moves higher 

(Reuters) -- Gold steady on Greece debt fear, soft U.S. data

(Bloomberg) -- Euro Weakens on Greek Debt Concerns


(ZeroHedge) -- The Greek "Ultimatum": Bailout (For The Bankers) And (Loss Of) Sovereignty 

(NY Times) -- Utah Law Makes Coins Worth Their Weight in Gold (or Silver) 

(MarketOracle) -- Gold Going Parabolic This Summer 

(Armstrong Economics) -- The End of Time 

(International Business Times) -- Why gold demand is surging in China? 

(True Economics) -- Dr Constantin Gurdgiev: A note on my appointment to GoldCore