Gold is trading at USD 1,708.20, EUR 1,230.11,
GBP 1,071.37, JPY 129,700, AUD 1,650 and CNY 10,864 per ounce.
Gold’s London AM fix this morning
was USD 1,713.00, GBP 1,070.69 and EUR 1,229.54 per ounce.
Yesterday’s AM fix was USD
1,656.25, GBP 1,036.19 and EUR 1,187.96 per ounce.
Gold in USD – 30 (Tick)
Gold has extended yesterday’s 4%
rise in the US, with further gains seen overnight in Asia and consolidation
in Europe. Safe haven demand continues due to increasing risk of a failed outcome
from the European Union leaders' meeting scheduled later today and due to
significant macroeconomic and monetary risks.
The cancellation of a European finance
ministers meeting and downplaying of expectations by euro-zone officials
about the outcome of the EU summit is adding to investor concerns about
contagion emanating from the nexus of European banks and large sovereigns
including Italy. There are conflicting reports that Berlusconi has agreed to
US Treasury Secretary, Timothy Geithner
warned of the “catastrophic risk” posed by the turmoil.
The Bank of England dismissed the chaotic
efforts to save the eurozone from financial
meltdown as a temporary solution to the region’s woes.
Governor Sir Mervyn
King said long term issues such as towering levels of debt and structurally
weak economies still needed to be tackled.
‘The aim of the measures to be
introduced over the next few days is to create a year or possibly two years
’breathing space,’ he said.
King’s warning follows that of
former Fed Chairman Alan Greenspan who warned on CNBC two weeks ago that the
EU was doomed to fail because the divide between the northern and southern
countries is just too great.
The key problem facing bureaucrats and
bankers of massive swathes of debt in the European and global financial
system is not being tackled. They are attempting to rectify a problem of too
much debt by further electronic and paper money creation and the creation of
even more debt.
The growing risk now is that in a
desperate attempt to solve the crisis, bankers and bureaucrats in the EU, US
and elsewhere are practicing an extreme form of financial alchemy which risks
stagflation and possibly in a worse case scenario
Monetary economics and history shows that
there will be costs and ramifications for the creation of billions and
trillions of euros, dollars, pounds, yen and other fiat currencies.
The European Monetary Union (EMU) rightly
expressly forbid the printing and electronic creation of money to bail out
banks and sovereign nations.
A look at a history of
currencies—including the mighty Deutsche Mark—shows the
unavoidable results of currency debasement.
Bild reported, without
citing how it obtained the information, that the Bundesbank’s
gold reserves may be used as collateral in the event that the European
Financial Stability Facility can’t meet its payment obligations.