Fiat currencies continue their devaluations. by Jake Towne, the Champion of the Constitution
(libertarian)
Monday, June 20, 2011
Concerns over Greek debt default and rioting are resulting in a contagion of fear over the finances of the European Union. Gold hit an all-time high in British pounds with the morning's London PM gold fix of 952.91 pounds per troy ounce of gold. Euro gold is just 8 Euros shy of a new all-time high with 1,078 Euros per ounce of gold, and US dollar gold is just $5 off its London exchange high with today's PM fix of $1,544.
Interest rates on Greek 2-year government bonds hit an intraday high of greater than 30% last Thursday, and current trading has the interest rate at 28.3%. The interest rate on Greek 10-year notes jumped more than 40 basis points to 17.3%. These rates indicate either default or, far more likely, a restructuring of Greek debt and possibly huge losses to bondholders.
Greek government workers at the nations' power plants began 48-hour rolling strikes, leading to power outages all over the nation. The strike is in response to government plans to privatize the country's electric grid.
Bloomberg published the considerations that perhaps up to half of Greek's next bailout of 12 billion Euros will be withheld to ensure compliance with austerity measures. A major German newspaper, Der Spiegel, reported German officials have decided against increasing the European Central Bank's Emergency Financial Stability Facility (EFSF). The move would have doubled the German taxpayer's share of foreign bailouts from 123 to 246 billion Euros.
The week's monetary events are just getting started -- the Federal Reserve's Open Market Committee will meet June 21-22 to discuss interest rates and the end of the quantitative easing program, nicknamed QE2. While the FED has indicated QE2 will end, the stock markets have been easing downward prompting speculation that more money will be printed in a QE3 program. The FED has indicated near-zero interest rates will continue for the rest of 2011.
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Posted By: Bill Gee
Date: June 20, 2011 12:47:14 PM
In this week's Bloomberg BusinessWeek magazine, it was reported that gold mines that were used in the past are now being reopened in order to extract more gold using modern technology. These include several in Spain and Egypt that were first used by the Romans and another in South Carolina that was used to produce gold for the Confederacy. The extraction price is high ($400-600) per ounce, but with gold prices nearing $1,600 per ounce, it now makes business sense to re-open these historic mines!
