Euro Gold Targets Record EUR1,072/oz On Risk Of Forced Greek Default And Eurozone Debt Contagion

Tyler Durden's picture

From GoldCore

Euro Gold Targets Record EUR1,072/oz on Risk of Forced Greek Default and Euro zone Debt Contagion

Gold and silver continue to rebound from their sell offs as Euro zone periphery worries intensify with real risks of defaults and possible contagion. Gold has risen from €1,010/oz to over €1,057/oz since Friday. The long period of correction and consolidation may soon see a break out above resistance at record nominal highs of €1,072/oz  - less than 1.5% below the current price.

Cross Currency Rates

The recent strength of the euro looks set to end as sovereign debt risks come to the fore again. This will likely see the euro fall versus most currencies and especially against gold.

There has been the usual misinformed and non evidence based assertions that the gold and silver markets were ‘bubbles’ and that they have burst. The same simplistic assertions were made after the sharp price corrections seen in 2008 and were proven badly wrong.

Gold in Euros – 4 Day (Tick)

There may have been a degree of speculative froth in the very short term, particularly in the silver market, however as we have continually shown in recent months both the CFTC’s Commitment of Traders reports and the total ETF gold and silver holdings did not show evidence of retail investors “piling into” these markets.

A tiny minority of retail investors demanding physical bullion may be beginning to effect prices marginally but they continue to be but small players in the bullion markets – especially when compared to the power and financial clout of Wall Street banks, hedge funds, pension funds and central banks. 

Gold in Euros – 1 Year (Daily)

Those diversifying into gold and silver bullion would be advised to continue to ignore those who simplistically call gold and silver bubbles. Many have been calling gold and silver bubbles since early 2008 when gold rose above $850/oz and silver rose above $20/oz.

Most failed to warn about the bubbles in equity and property markets and therefore do not have a good track record in this regard.

Their analysis continues to be selective and simplistic and can occasionally be biased. The fundamentals of supply and demand and the small and finite physical bullion markets being confronted with robust increased demand internationally and particularly in China, India and wider Asia are ignored.

As is ultra lose monetary policies and currency debasement on a scale not seen in modern history.

Rather than continually attempting to call the top of the gold and silver markets and thereby discouraging people from owning the financial insurance that is gold and silver – it would be wiser to admit that they cannot predict the future and that people should be diversified in order to protect against the extraordinary degree of macroeconomic, monetary and geopolitical risk in the world today.


(Bloomberg) -- HSBC Raises Gold, Silver, Platinum, Palladium Forecasts for 2011

Gold will average $1,525 an ounce this year, up from a previous forecast of $1,450, HSBC Holdings Plc said today in an e-mailed report.

The bank raised its silver estimate for this year to $34 an ounce, from $26, and increased its 2011 platinum forecast to $1,850 an ounce, from $1,750. It raised its 2011 palladium outlook to $825 an ounce, from $750.

(Bloomberg) -- Marc Faber Favours Gold Over Commodities and Equities on China Concerns

-- The growth of China’s M2 money supply, which has exceeded the U.S. total, signals further declines in commodities and stocks as it boosts prospects for more interest- rate increases in the world’s second-largest economy, according to investor Marc Faber.

The CHART OF THE DAY shows that money supply in China, including money in circulation and deposits, is increasing even after the central bank raised borrowing costs four times and increased banks’ reserve requirements seven times since mid- October. The lower panel shows the Thomson Reuters-Jefferies CRB Index of 19 raw materials slumped 9 percent last week while the MSCI World Index of stocks lost 2.1 percent.

“The next time-bomb could be detonated by some adverse economic developments in China,” said Faber in the May edition of his Gloom, Boom & Doom report. “Following a rebound we may go down more,” he said yesterday, referring to commodities and stocks in an e-mailed reply to questions from Bloomberg News.

China, the largest consumer of industrial metals and energy, is seeking to cool inflation which accelerated to a 32-month high in March. Demand fueled by its growing economy, which last year surpassed Japan’s in gross domestic product, contributed to record highs in copper and cotton this year.

Most investors have been bullish on commodities and stocks, expecting them to benefit from the so-called “inflation trade,” Faber said.
money net-long positions in futures and options in U.S. commodities dropped 2.4 percent in the week ended May 3, according to Commodity Futures Trading Commission data tracked by Bloomberg. That’s 7 percent below the October level, the highest since records began in 2006.

“When everybody thinks alike, I become very defensive,” said Faber. “I’m deferring any new purchases of the beneficiaries of the inflation trade, except for gold,” he said.

(Bloomberg) -- Gold May Rise to $2,000 as Alternative to Currency, Sprott Says

Gold may climb to $2,000 an ounce this year as investors buy the metal instead of holding currencies, said Eric Sprott, chairman of money manager Sprott Inc.

Gold will rise by at least 17 percent this year, Sprott said today in an interview during the New York Hard Assets Investment Conference. The metal averaged $1,228.45 an ounce last year on the Comex in New York and ended 2010 at $1421.40.

“It’s gone up 17 percent a year for the past 11 years; I’m sure it will do that as a minimum,” Sprott said. “It could easily hit $2,000 this year. That wouldn’t be out of the question.”

Gold has risen for 10 straight years and reached a record May 2 in New York as demand increased from investors seeking an alternative to the U.S. dollar. Silver has climbed for nine of the past 10 years and reached a 30-year high of $49.845 on April 25.

Sprott has lauded gold and gold stocks for at least a decade, and his company offers products for investors seeking to own precious metals.

Silver prices will rebound and jump above $50 on surging investment demand for the precious metal, which also has industrial and photographic uses.

“I see huge amounts of money moving in the physical silver market, almost as much as gold, so I think the price is going to go up faster than the price of gold,” Sprott said. “I suspect we’ll be back through $50 not too far from here.”

Silver Rises

Silver futures for July delivery advanced $1.829, or 5.2 percent, to settle at $37.116 an ounce at 2:09 p.m. on the Comex. Silver fell 27 percent last week.

Sprott, the keynote speaker today at the natural-resources investment conference, said that gold was the investment of the last decade and silver is the investment of this decade as confidence in governments’ finances diminishes.

“The demand will be driven by the debasement of currency,” Sprott said. “I can’t tell you how much demand there will be until I know how much they’re going to debase the currency.”

Sprott rose 26 cents, or 2.9 percent, to C$9.25 today in Toronto Stock Exchange trading. The shares have increased 15 percent this year.

(Bloomberg) -- Gold, Platinum Are ‘Attractive’ After Drops, Credit Suisse Says

Gold and platinum are “attractive” after last week’s drop, Credit Suisse AG said in a report.

Silver is the “only market that we still think is overvalued,” analyst Stefan Graber said in the report. Soybeans are favored in agriculture and copper and aluminum in industrial metals sectors.

(Bloomberg) -- Silver Extends Rebound as S&P’s Downgrade of Greece Fans Demand

Silver futures climbed, extending their rebound from the worst weekly drop since at least 1975, after Standard & Poor’s cut Greece’s credit ratings by two levels to B, reigniting haven demand. Spot gold declined.

Silver futures jumped as much as 2.1 percent to $37.90 an ounce before trading at $37.515 at 1:39 p.m. in Singapore. The metal slumped 27 percent last week as investors sold commodities from oil to copper. Immediate-delivery gold fell 0.4 percent to $1,507.98 an ounce, while futures rose 0.3 percent to $1,507.50.

“The bounce in silver is not too surprising” as there’s “a strong market appetite to buy anything on the dip,” Mark Pervan, commodity analyst at ANZ Banking Group Ltd., wrote in a note. The Greek downgrade “reaffirms the reason why investors require the safe-haven support of the precious-metals market.”

Further reductions for Greece after yesterday’s move are possible as the risk of default rises, S&P said in a statement. Another cut would make Greece the lowest-rated country in Europe as yesterday’s reduction, the fourth by S&P since April 2010, left it even with Belarus.

Before last week, demand for precious metals had strengthened this year as investors sought protection against financial turmoil in Europe, geopolitical tensions in the Middle East and the weakening dollar.

Net investment demand for silver will exceed 100 million ounces for a third year in 2011 as political and economic turmoil spurs demand, according to CPM Group, which has published reports on precious metals since 1971.

Focus on Greece

“The focus could remain on Greece,” said Ong Yi Ling, a Singapore-based analyst at Phillip Futures Pte Ltd. “Safe-haven inflows into gold and silver may increase if the euro-zone debt crisis accelerates.”

Greece’s money managers warned of further damage to the economy should European leaders restructure the country’s debt. “It would be devastating for the Greek economy, and detrimental for the rest of the European Union and the euro,” Aris Xenofos, president of the Hellenic Fund & Asset Management Association, said before the cut. The group represents 36 companies.

Silver assets held in exchange traded products, or ETPs, fell for a sixth day yesterday to 14,191.21 metric tons, taking their decline over the period to 1,173 tons, according to data compiled by Bloomberg. Gold ETP holdings fell 3.1 tons, or 0.2 percent, to 2,054.64 tons yesterday, data showed.

Gold may climb to $2,000 an ounce this year as investors buy the metal instead of holding currencies, Eric Sprott, chairman of money manager Sprott Inc., said in an interview yesterday. Silver may climb to more than $50 an ounce, he said.

Immediate-delivery palladium and platinum were little changed at $729.50 an ounce and $1,794.50 per ounce, respectively.

(Bloomberg) -- Silver Investor Demand Climbs on Haven Appeal, CPM Says (1)

Net investment demand for silver will exceed 100 million ounces for the third straight year in 2011, as political and economic turmoil spurs demand for a store of value, said CPM Group, which has published reports on precious metals since 1971.

Investors will be net buyers of 142.2 million ounces of silver, after purchasing 142 million last year and 141.9 million in 2009, Jeffrey Christian, CPM’s managing director, said today in a presentation in New York. In 2008, the total was 58.4 million. Prices will be higher by the end of the year, Christian said.

Purchases climbed for “a safe haven, a portfolio diversifier, and because of positive supply-and-demand fundamentals,” CPM said in a statement, after releasing its 223-page silver yearbook.

Last week, silver futures plunged 27 percent, the most since at least 1975, after the Comex exchange in New York boosted margins by 84 percent in two weeks. Before the plunge, the price doubled in the past year.

Today, silver futures for July delivery added $1.829, or 5.2 percent, to close at $37.116 an ounce. On April 25, the price reached $49.845, a 31-year high. The exchange is owned by Chicago-based CME Group Inc.

Demand for silver coins increased more than 11 percent to 74.5 million ounces in 2010 from a year earlier, the highest since 1968, CPM said in the statement.

Supplies of refined silver may rise 4.7 percent to 1.03 billion ounces this year, the largest gain since 2005, CPM said. Fabrication demand is likely increase 5.5 percent to 890.9 million ounces, the researcher said.

In 2010, silver futures rose 84 percent. Gold climbed 30 percent, the 10th straight gain, while palladium almost doubled and platinum advanced 21 percent.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
earnulf's picture

OMG!   Where's the margin increases when Europe needs 'em!

Weisbrot's picture

current government policy world wide - screw the masses to benefit the few

chinaguy's picture

IMF is arranging 80-100 bln aid package to replace Greece’s existing bailout programme – Kathimerini reports

Ruffcut's picture

Its like a bad rerun movie running in a loop.

Someone, please make it stop.

The Axe's picture

Portugal and Greece are going to sell Gold to lower there soverign debt. Supply and new margin requirements will keep a lid on gold. Next stop 1450 not 1550

chinaguy's picture

Yes, except neither of them could sell enough to make any material impact on global supply.

Snidley Whipsnae's picture

SE Asia, India, Mid East... All will Hoover up whatever gold that the small fry soverigns put on the market.

As a side bet... I will wager that none of a potential gold put on the market by any PIIG will be offered to China.

TwoShortPlanks's picture

I disagree, China needs to buy two things; more Gold and a healthy market to trade into in the buy the debt of your future buyers!

China will buy European debt.

Snidley Whipsnae's picture

I don't know what you are disagreeing about. I don't doubt that China will buy more Euro debt.

China will not be offered any Euro gold sold by any PIIG...Just as China was not allowed to buy the 200 tons of gold sold by the IMF, although China wanted it. The IMF sold the gold to India.

The West is not going to offer China Western soverign gold unless the Euro is in desperate straits.

The Axe's picture

of course I did top tick silver two Monday's ago, selling my American Eagles bot in 1989 for 5.80 in NY for 48.75..bitches  flag that  62,000 

Snidley Whipsnae's picture

You sold silver and made a profit in dollars that the Fed prints at will and you feel good about your move?


Good luck getting back in when your fiat is worthless...

Urban Redneck's picture

If Portugal and Greece sell gold, as opposed to pledging it as collateral, it will be to their creditors, not on the open market.  Central banks will continue to be opportunistic net acquirers on the open market.

writingsonthewall's picture

Does anyone remember....back in the day.....when PM's (esp. silver) were being predicted to be $12 by christmas on the back of a margin increase induced slide?


Where are all those silver bears now? They were so confident - and now we're heading back up the charts again they have scattered like roaches fearing the light.

luckily we all know they're bullshitters and not one of them put their money where their big mouths lie. They think this is a bubble - they don't understand FIAT currency systems and their inevitable conclusion (collapse).


Ah the good 'ol days eh? - when the silver bugs of ZH had to bite their lips for....well it was a whole 2 days wasn't it?

Some crash - I'll go with that Jim Rogers bloke - there will be checks in the progress and rise of PM's - but these will be soon outdone by the continual rise and rise of the commodity markets - to the point where they appear to be mere blips in the rear view mirror.

topcallingtroll's picture

I put my money down four times and called it right three and posted it every time.

Sold Silver around 25 ....mistake, bought back in SAE a little at 31

Sold last box SAE again when buy offers hit 50.

Went all in ZSL at 13.69 and posted.

Covered after a 50 percent gain.....i aint stupid nor greedy.

Said to buy AGQ at the open 179.45 the day after SLV closed exactly on the 100 DMA.

sold same day for about a three percent gain.

Yesterday posted that strength and intermediate basing pattern suggested silver will go to forty.

Will have to reassess after that, but i suspect we will see a classic doyble top and consolidation in the high thirties later. But that is too far ahead to predict so i am going to reassess if silver hits forty.

Snidley Whipsnae's picture

er...don't forget to pay uncle sugar. lol

While you were doing all that frantic buying/selling I was sitting on lots of physical PMs and still am.

I don't play silly trading games to make a 'profit' denominated in a fiat currency that I do not believe in.

Screw the fiatscos.

topcallingtroll's picture

Sadly all my silver was lost in a tragic boating accident.

As far as your claim above that the usa wont come out of this on top the game aint over yet! I dont hear no fat lady.

Snidley Whipsnae's picture

The fat lady hasn't given voice cause the game is still on.

When the game ends do you want to be sitting in a paper chair or one made of PMs?

Long-John-Silver's picture

I buried mine in the back yard. Unfortunately some one dug it up while I was away at work. It's all gone.

lumpenprole's picture

paragraph 1-do you mean "less than .5% ABOVE"

"ultra lose" ?

I'm guessing you meant "ultra-loose"

These types of errors create as sophomoric, fringe impression.

topcallingtroll's picture

Unless tyler is a loudmouth iconoclast that got himself blacklisted from his industry, then he doesnt have time to spell check.

I should say "tylers" but there appears to be a main one.

Tortfeasor's picture

"create as sophomoric"? do you mean "create a sophomoric"?

gordengeko's picture

"These types of errors create as sophomoric, fringe impression."

Who gives a shit.  I mistype shit all the time if that means I have no credibility or appear as sophomoric (I graduated from a public HS with I think a 2.2 or less? I don't remember exactly because I used to fix report cards before computers were what they are today and profit handsomely every quarter) or inferior in intelligence then junk me and move on.  Does that tell you what I think of the education system?

topcallingtroll's picture

I have always said the usa will come out on top once this is all over.

The reports of america's death have been greatly exaggerated.

Snidley Whipsnae's picture

...and I have always said that you are clueless... and I have been right...


topcallingtroll's picture


Opera aint over yet. Fat lady hasnt come out.

ivars's picture

A 30% correction was a bursting of a bubble, though its short term bubble, for sure. Less than 1 year, and silver will be back in 45 USD.

JimBowie1958's picture

Ivars, there is no way this was a bubble.

Production of silver products never declined, speculators never became 90% of the purchasers of silver, etc.

Prices ran up in the typical over-done pattern that prices usually take, then the market makers apparently hammered it down some, but it is resuming its climb.

None of that is behavior seen in a bubble.

Snidley Whipsnae's picture

JB... the trolls are out in force like a swarm of gnats...

They can't differentiate a long term trend from a bubble...

As long as the central banks continue to print like crazy, the fundamentals have not changed and the long term trend in PMs remains intact...

topcallingtroll's picture

Completely agree long term trend intact.
We differ on the particular path it will follow and in a belief in a fiat repudiation.

JimBowie1958's picture

TCT, it seems that there are two very different groups arguing about silver here.

One trades in silver and is intending to make cash from it as it gyrates through the typical ebb and flow.

Another group is buying silver as a hedge against hyperinflation, and this group includes me.

I really dont care about a regression in silver prices as that simply enables me to buy more of it at a better price as I have little doubt about where it will be in a few years.

That doesnt make me stupid, nor you evil for disagreeing. It simply means we have different intentions.

Have fun.

JimBowie1958's picture

SW, I am not sure ivar is a troll, but I am new here, so you may be recalling past posts of his I am not aware of.

Seems that there is agood amount of polarization among the posters here. Maybe we could learn more from each other if we are more charitable in our presumptions regarding those who have come to conclusions we disagree with?

Just saying...

Stormdancer's picture

Probably less than one month Ivars.  If you can't tell the difference between a bubble and a pretty normal correction of a very extended upleg in an ongoing secular bull market ...well...saposjoint is for saps....but we knew that already.  Go pimp your worthless drivel somewhere else.

Snidley Whipsnae's picture

Euro monopoly money, US Dollar monopoly money, Japan Yen monopoly money, ad nauseum... It's all crap, colored paper, trash, and it's all going to burn.

PMs... The only real money.

If Greece and the other piigs need more monopoly money why don't they set up presses, as Ireland did, and print some colored paper in the flavor of their choice?

Why is the colored paper printed by some damn central bank worth more than identical colored paper printed by Greece?

Bazooka's picture


They behave exactly like the equities....they fall, rise, plunge like the equities. They move in near lock step with stocks.

Why didn't Silver and Gold rise in May of 2010 during the Greece financial crisis? they fell with stocks! Why didn't gold and silver rise during 2008 USA crisis? They plunged with stocks.

Point made

Snidley Whipsnae's picture

"All paper will burn. Come, sit by me. We shall watch the bonfire together." - paraphrase of Another

There will be a single day of reckoning for PMs... That will be the day that fiats are recognized for what they are... trash.


nontaxpayer's picture

Gold only has to be reprised once in your life time - that's plenty enough. It'll either be stunning or spectacular.

topcallingtroll's picture

Gold is probably still in a long term uptrend.

Bethatasitmay, a fiat repudiation can be stopped by tight money.

Even in argentina after a fifty percent drop there was no repudiation of the peso, and that fifty percent drop was in a matter of a few weeks. Read ferfal about the details.

Snidley Whipsnae's picture

"Bethatasitmay, a fiat repudiation can be stopped by tight money."

Once again you have opened your mouth and are clueless...


Ludwig von Mises 'Inflation can be pursued only so long as the public still does not believe it will continue. Once the people generally realize that the inflation will be continued on and on and that the value of the monetary unit will decline more and more, then the fate of the money is sealed. Only the belief, that the inflation will come to a stop, maintains the value of the notes.
AUD's picture

I may be wrong here but I believe Argentina was bailed out by the IMF & that was long before the USA started looking like it will need a bailout from the IMF.

Rynak's picture

Even if this WERE true........ stocks can burn, metals don't. Point made.

ivars's picture

In few days silver will finish its correction to 30 or below . Do not make too much of a small hickup on the way down from 49,72 which started on April 25th. The drop has not ended-yet:


Similar hickup is happening in oil- it will last only few days before dipping lower, then resuming way up:

But silver is no oil. Who needs it? ( a joke, excuse me). In one year, silver price will be above 45 USD, no worries here.

Snidley Whipsnae's picture

lol... and your crystal ball is in perfect working order?

Buy and hold physical PMs and avoid the rush when the paper printers hair is on fire.

Rynak's picture

Ignore him.... just a known troll..... and a lazy slacker too.... just spamming the same 2 months old post for days now.

ivars's picture

The post is different but there is no need to change March 13th chart which was correct.

TwoShortPlanks's picture

So many Trolls, the pressure must be on big-time.

Snidley Whipsnae's picture

The fat cat bankers take down of PMs was extremely short lived... So, the trolls are trotted out in force... yet again.

I have been buying gold/silver since 1968... Do the trolls really believe they can influence me or others like me?

BTW... I added PMs on the dip.... Thanks banksters and

Franken_Stein's picture


Yeah, let the Euro fall !

This is music to our ears, ehm, exports.


falak pema's picture

yawol...but merkel doesn't want that at all...So there are two of the small of the Oligarchy...not east and west as of old...but top and Marx once said...bring me the smelling salts please! 

Franken_Stein's picture


At least Germany is creating and selling things of longlasting value and not empty promises written on a paper.


When was the last time you sat in a Mercedes or BMW or Porsche ?

When you hear that heavy door closing, making this distinct sound of "thump".

And then you are surrounded by silence. ;-)


You lean back in your leather chair, the fragrance of freshly produced plastic, polished wood and nappa leather getting into your nose.


The logical, easy to overlook and intuitive structure of instruments and displays.

And that 300 hp 6-cylinder diesel with 350 Nm, using only 5.0 l/km ~ 50 mpg.


Or what about that new 968 MW peak solar trough power plant that Solar Milennium is currently erecting in Blythe, California ?

That's a Blythe I like.