Gold Robust Over $1,500 As Stagflation Deepens And Greek Default Risks Eurozone Break Up And Financial Contagion

Tyler Durden's picture

From Gold Core

Gold Robust Over $1,500 As Stagflation Deepens And Greek Default Risks Eurozone Break Up And Financial Contagion

Gold is trading at $1,517.80/oz, €1,051.33/oz and £925.09/oz. 

Gold is tentatively higher this morning with the British pound, yen,
Swiss franc and dollar showing weakness. Greek German 10 year bond
yields have surged to euro era record highs and the Greek 10 year bond
has surged to a new record high of 17.146%.

The euro has remained remarkably stable, so far, but euro gold at €1,052/oz remains near (3.4%) record highs of €1,088/oz.

Bloomberg European Crisis Monitor

Gold is consolidating above $1,500/oz after rising from just over
$1,400/oz at the start of the year to a record nominal high of
$1,567/oz. The real risk of a Eurozone break up and the likely financial
contagion that would result is supporting gold prices and is one
fundamental factor likely to lead to further safe haven demand for gold
in the Eurozone and internationally.  

Credit Suisse has said that gold may rise above $1,550/oz in the next
few days and a close above that level “would be important”.

Cross Currency Rates

Stagflation Threatens Major Global Economies - Inflation in China at 5.5% and UK at 4.5%

Another fundamental factor supporting gold prices and likely to lead
to further gains are the increasing signs of stagflation in major global
economies. UK inflation data released this morning shows that inflation
remains high at 4.5%. 

The Bank of England expects inflation to reach 5% later this year
prior to falling but the Bank’s credibility is increasingly strained as
inflation has now exceeded the BoE’s target of 2% for 34 of the last 40

British savers and pensioners are suffering from negative real
interest rates and this continues to make gold an attractive
diversification from a devaluing pound.

Gold in British Pounds – 180 Days - (Daily)

Meanwhile in China, inflation has risen to 34 month highs at 5.5% as
food price and energy inflation deepens. Lending has fallen and China’s
money growth has fallen to a 30 month low. Overnight, China upped its
bank reserves to try and contain inflation.


Gold in Yuan/ Renminbi – 1 Year (Daily)

The Chinese have experience of currency devaluation and even
hyperinflation and are aware of how paper currencies can be debased and
lose purchasing power. Serious inflation in the past has sparked rioting
and social unrest and is doing so again today as seen in many riots
throughout China (particularly in the South) in recent days. 

There appears to be a gathering “perfect storm” of deepening
inflation, slowing economic growth and double dip recessions,
stagflation, sovereign debt crisis in many major western economies and
the risk of sovereign and banking contagion.

This will see gold supported in the coming months and the inflation
adjusted high of $2,400/oz remains a viable long term target given these
fundamental risks.

Silver is trading at $34.74/oz,€24.07/oz and £21.17/oz.

Platinum is trading at $1,791.70/oz, palladium at $796/oz and rhodium at $1,925/oz


US Is in Even Worse Shape Financially Than Greece: Gross

PRECIOUS-Gold bounces after 1 pct fall; jewellers buy

Gold Snaps Two-Day Drop on Inflation Concern, Greek Sovereign-Debt Crisis

Gold, silver advance in electronic trading

(Wall Street Journal) 
Impasse Leaves Belgium Without Government One Year After Elections


(Financial Times) 
The eurozone heads for break up

(The Telegraph) 
Opec's Vienna summit meant nothing for long-term oil price trends

Silver in China could turn out to be the new gold

Exclusive: In Q1 Bernanke Spurred Inflation By Successfully Offsetting The Ongoing Collapse Of The Shadow Banking System

(The Christian Science Monitor) 
Is the Fed manipulating the stock market?

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ZeroPower's picture

Robust(er?) than silver or other PMs, sure, but many are expecting a visit towards 1460 or so. Loading up the truck then.

$1400 would not be favorable, as Au would be flat on the year.

dbach's picture

Yeah we are sitting on the 50 day sma, which has held propped up price action for a while, look out below if that breaks. That'd be a good chance to load up though as you say.

topcallingtroll's picture

the 50 dma was not the best time to load up on silver.

However gold may be different.

ZeroPower's picture

Agreed, but silver is a whole other beast. Breaking down a lot more heavily than gold (rightfully so).

Looking for 200DMA myself, not touching it long otherwise. Many here chastized me back in April for saying we'd be lucky to get through the year with silver in the 40s, well, i guess we shall see.

trav7777's picture

the only people who chastized you were idiot pumpers who were trying to create bagholders...ignore them

topcallingtroll's picture

I don't think they viewed themselves as pumpers trying to create bagholders, but if one's intent is to cheerlead silver and sell at the peak, then that is what you are, a pumper trying to create bagholders.  However they hoped the bagholder would buy at 100 or 150.

I always try to buy low and sell high too.  I am not morally superior. 

GoinFawr's picture

Awww, what a precious daisy chain you guys make... a couple more and the circle jerk will be complete; butt for Pete's sake make sure those 'flanking' trav are albinos!

All is chosen's picture

"British savers and pensioners are suffering from negative real interest rates and this continues to make gold an attractive diversification from a devaluing pound."

 99.99+% of these two groups have no idea about gold.

Many savers felt forced to buy property to rent out when they saw interest rates slashed to keep the housing bubble going.

The usual attitude from the land where 'you can't go wrong with property' is:-"Gold?? - what use is that? You can't get an income from it"

DosZap's picture

The usual attitude from the land where 'you can't go wrong with property' is:-"Gold?? - what use is that? You can't get an income from it"


No, but you cannot get anything but deflated pounds in Banks losing more and more value by the day.

At least w/gold the odds are looking real good that those hold are going to be payed back in spades , and very soon.

Badabing's picture

Gold Robust?

Not if they keep smacking it down.

When will the manipulation end?

Reptil's picture

Oh that's simple: It will stop when the ones smacking it down have grabbed most of it. They'll then introduce a gold standard world currency.

Good you say? Well, up to a point: The achilles heel of Gold backed currencies is that the ones that OWN the gold, control the currency, regardless of any democratic oversight. The banks that own that gold can pull it back thus creating crippling deflation, to bankrupt and then take over more wealth. So it is of the utmost importance, for countries, funds and individuals, to secure as much gold as possible, without sparking the market, before the whole balloon of fiat deflates into nothingness. Because that is exactly where we're heading: Technically all the CDS and all the subsequent debt is many times the Planet GDP. It can never be paid back.

The control over the currency through the ownship of gold happened before: in 1873

But then silver was minted as money and this broke the gold stranglehold. Sounds weird doesn't it? Yes, now we're in the fiat ponzi, but it will happen again. The reason for the downward manipulation is now hopefully clear too. It's there to be able to steal everything.

Watch this (the beginning is a bit boring you can skip the first 10 minutes)

Jayda1850's picture

The whole point of the video you posted is to suggest that the solution to all of our problems is to have the federal government print its own debt-free money and to abolish the debt money system where a private institution creates the money supply and then lends it to government charging interest. Although I totally agree with abolishing the central bank, do we really want to trust the federal government to create a stable money supply? Politicians are up for reelection every couple years, so all the incentive is to print as much money as possible to hand out to the voters in order to stay in office. Here we are borrowing 40 cents of every dollar and yet the government still spends it like it is going out of style. If we just let them print whatever they want, how does this not lead to a hyperinflationary scenario? The whole idea behind a gold standard is that it is a finite material that cannot be manipulated. The whole idea of allowing the federal government to print its own debt-free money, which I agree is better than having to pay interest on the money we borrow, doesn't sit well with me because I do not have enough trust in man's altruistic nature to think that the elected leaders in government would put the county's interest over their own personal interests.

Escapeclaws's picture

Gold seems to be moving exactly inverse to the US dollar in recent months. So thinking gold will go down must mean the dollar is going up. This is most easily seen by charting the gold/dollar index ratio and the dollar index itself on the same chart. That suggests the near term outlook for gold is a forex question.

PeaBird's picture

You need to appreciate reality a little bit more.

With USD prices for the yellow lump about 3.5% below recent nominal highs, you are calling that a "smacking it down"?

C'mon dude...look...

Bay of Pigs's picture

Yes, and when point that out the critics jump all over you as being a "pumper" and wanting others to be "bagholders".

I've seen gold go down 30% before ($1000 to $690) and silver over 50% ($21 to $9), and these same assholes that were bashing it then are back again.

They don't get it and never will. 

Fred C Dobbs's picture

I keep buying real gold a little at time.  

topcallingtroll's picture

Gold is seeming to act almost like a risk off asset.

Let's see what gold does if it faces a severe economic contraction.

That would be proof of whether or not the attitude toward gold has changed.

theMAXILOPEZpsycho's picture

You're right. I think with the end of QE2 and start of QE3 we're really going to see how gold and silver can perform. Lets face it the only reason why people on ZH aren't more heavily invested is because of deflationary concerns. If they both stay within say 7% of their current price over the summer, I'd say they will become massively more attractive to many as safe haven assets. At the moment I'm keeping my powder dry, looking to load up in the summer. But I do have to say, they might not even dip at all...

DosZap's picture

Let's see what gold does if it faces a severe economic contraction.


It will go down at first (most likely), and then it will take off like hell wont have it,because we are going into (are in deflation) to a degree now, some inflation(higher prices), but when the market implodes we will go into hyper drive inflation, and folks will be chasing PM's for any price, if they can get it.

Inflation 25-50%, a devaluing frn, and gold & silver nowhere to be found.


It will not be like last time, for long, and IF it does drop, you had best buy alll you can afford.

Bazooka's picture

Gold Robust....i'm sorry but you're jerking the slippery slope of hope.

In a deflationary death spiral, which will recommence (it not already), credit implodes and all try to raise way will be to sell equities and precious metals (yes, gold and silver are no more than pair of equities until they significantly deviate from syncing with equity indexes).

Reptil's picture

I believe the currency will collapse, unless a lot of it is printed extra. This is a dead end as well. Stagflation and a slow demise of purchasing power, as we see now. The die was cast when CDS were allowed. That was the knife in the back of fiat.

When gold plummets, in that deflationairy spiral, you can expect anyone with any liquidity to swoop up as much as possible. That will be difficult as there will be distrust, just like in 2008, since the contagion is now even greater. The run on dollars and euros to be able to unwind positions will be closely followed by a run on the next stop in the safe haven train. Since dollars as well as euros will not be viable currency, if only a few will hold it, in a total crash of trust amongst the banks. Enter then the next fase....

youngman's picture

I think gold and silver have moved to the bankers stealth mode....they are buying it by hook or crook....HFT´s taking the paper down...and in the end..which I think is this year some time....when we have a financial failure....we will find out who has been buying all the gold...and who has been supressing the price....

There is nothing paper out there I would be investing in right now...not one thing
There are no sticks and bricks that look like a great opportunity to me either...

Gold and silver are the only safe havens right my dark side ...and that is getting bigger...says someday the Government will say it is illeagal to own it also...

theMAXILOPEZpsycho's picture

thats going to be hard to enforce globally, but I'd certainly be scared of some kind of confiscation in the us. I have most of my bullion with in hong kong and zurich. Also, they'll only try and confiscate gold once the value of the USD is zero..otherwise making gold illeagal is just going to cause the dollar to tank.

And lets imagine a world where currencies are collapsing and gold and silver have been made illegal. People would have to trade and store something of value. Art, land, food, livestock, wood, maybe a makeshift currency like the "maks" found in us prisons... 

Silverhog's picture

Friends and family still think I'm a whack job survivalist for buying physical Silver & Gold. My guess is I'm still in a very small percentage of population who's buying PM's. Yet despite the plunging Comex Silver inventory, PM's seem easy targets for price control. When another 5% of the public moves into metals will end all this quite quickly.

theMAXILOPEZpsycho's picture

I think some large insitituions will be looking at it over the summer; just wait for a few more universities or companies to come in. I think insititutional demand will go up before it really takes off with the public

Fred C Dobbs's picture

When they start to change their minds about you being crazy then you might want to consider selling some precious metals, not until then.  

June 14th is a major turn date for Martin Armstrong.  Anyone here care to explain what they think that might be?  

DosZap's picture

When they start to change their minds about you being crazy then you might want to consider selling some precious metals, not until then.  


And invest in what other PAPER?.

I am not selling one ounce of anything until this shitpile comes to a complete end.

When a new unit/type of money is developed people can trust is employed.

Anyone who does is nuts.


topcallingtroll's picture

You are a whack job survivalist.

That doesn't mean your ideas are always wrong.

fasTTcar's picture

Let me add:

"Just because you are paranoid, does not mean that they are not out to get you"

fonestar's picture

I'm sure they will have to introduce a something-backed currency.  That's not to say that they will allow you to own the real deal though.  Gold, Silver, Diamonds for the elite, paper for everyone else.