With Gold trading in the low $1700′s, people are asking if gold has lost its glitter. One look at the current world economic situation suggests that this may just be the calm before the storm.
The Obama administration, in a move displaying epic stupidity and overarching shortsightedness agreed to rev up the printing presses and print more US Dollars in order to put a band-aid on the Euro Zone financial crisis and allowing Andrea Merkel, Nicolas Sarkozy and the rest of the European Socialists to kick the reform can down the road a few months.
Having lived in Europe for 3 years, I can say with a high degree of confidence, European leaders have less stomach for reform than our current batch of Congress men and women do. Yet without reform, the crisis in Europe will only continue to escalate until it collapses. The Germans have the discipline to accept austerity measures necessary but there is no way the French, Spanish, Portuguese or Greek ever will and while the Swedes are once again operating at a budget surplus thanks to a conservative government that believes in keeping its promise to its people, it’s doubtful they will want to underwrite the addiction to entitlements and lack of discipline displayed by the rest of the EU.
The US Dollar bandage won’t hold back the impending doom more than a few months and when the you-know-what hits the proverbial fan, you can expect gold to move up sharply. Whether it will reach $5,000 an ounce is a subject for serious conversation but well beyond $2,000 is a given when the EURO collapses.
