Eurozone Debt Crisis Deepens Sending Euro Lower and Gold to New Record at EUR 1,080/oz
The euro, global equities and bonds in peripheral Eurozone countries
are all lower this morning on heightened concerns about the debt
crisis in the Eurozone. The euro has fallen against all currencies and
is now at a record low against gold at EUR 1,080.21/oz. Silver is lower
against most currencies but is higher against the Australian dollar and
the euro ( EUR 24.80/oz).
Greece’s 10 year government debt has surged to 16.98%, Portugal’s to
9.6% and Ireland’s to a new record at 10.76%. The yield on Italian
10-year government debt is up 9bp to 4.85% after S&P cuts its
rating outlook on Italy’s sovereign debt to “negative” from “stable”.
The Spanish 10 year bond has risen 11 basis points to 5.57%.
Equity markets in Europe have followed their Asian counterparts
lower. Asian equities fell due to Eurozone debt concerns but also
inflation concerns and the risk that the US economic recovery is
faltering. Italy’s stock market (FTSE MIB) is down 3% while Spain’s
IBEX is down 1.7%.
Besides sovereign debt risk, gold is also being supported by
geopolitical risk as seen in the increasingly unstable nuclear armed
Pakistan where armed militants attempted to take over Pakistan’s naval
air force headquarters.
There is increasing tension between the U.S. and Pakistan after what
the U.S regards as Pakistan’s failure or collusion regarding Osama Bin
China has increasing economic and military ties and interests in
Pakistan and has vowed to standby Pakistan and has called on the world
to respect Pakistan’s sovereignty.
Separately, in an interview with the Financial Times on Saturday,
Henry Kissinger has warned of a world war involving Pakistan and India.
The eruption of Iceland’s Grimsvotn volcano is leading to concerns
about the economic impacts on the aviation industry and wider impacts
on consumer confidence on an already fragile European economy.
Demand for silver bullion in China remains robust with Chinese
silver imports in April at 339.4 metric tonnes, according to data
released by the Chinese customs agency today.
This compares to 302.09 metric tonnes in April 2010 or an increase of
over 12% from the same month last year. It compares with silver
imports of just 132.5 and 127.3 metric tonnes in April 2009 and April
This shows that the record Chinese demand for silver bullion seen in
2010 is continuing in 2011 and higher silver prices are not deterring
China imported 3475.4 tonnes of silver bullion in 2010 up a massive
fourfold from 2009 when imports were just 876.8 tonnes. Importantly,
China was a net exporter of silver bullion up until 2007.
Gold is trading at $1,508.80/oz, €1,078.64/oz and £935.81oz.
Silver is trading at $34.64/oz, €24.76/oz and £21.48/oz
Platinum Group Metals
Platinum is trading at $1,747oz, palladium at $720/oz and rhodium at $1875/oz.
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