Is the IMF walking out of the Greek talks going to move the markets?
Chris joins us to chat about the news that the negotiating committee for the IMF has left the talks with Greece. Does anyone care anymore… We think they should and will soon enough.
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A default would be a major credit crunch deleveraging event, could rally the US dollar big time and smash gold.
The trouble for goldbugs is that the Euro and gold have largely been positively correlated since the inception of the Euro. More or less this necessitates a resumption of bull market in the Euro to resume the bull market in gold, unless a paradigm shift occurs but such a paradigm shift is unlikely to cause a Euro (or European currency whatever that might be) bull market for some time, I feel.
The Greek crisis is hobbling both the Euro and gold. Cheap Euro is good for EU trade position, especially German corporate profits and bad for gold.
Best chance for gold is when the US dollar tops, who knows when that will be? 2016? 2017? 2018? to resume an upward trend.
Are there any gold bug left here? Only silver bug is Dave.
Gold is inflation hedge. More paper money chases same amount of gold means its price goes up. Any other relationship are guess work so they keep changing because the relation breaks after a while. As a scientist, the relation has be derived, otherwise there is none. Government suppression has major impact but they have to let it rise regardless since they don’t have unlimited supply of physical metal. It is called managed reteat, similar to trench warfare. So you can see gold goes up for a period, than it goes down and then it consolidates. But If you look at 10-20-30-50 years, gold goes up with money supply.
If government has hard currency policy so they print only as much as gold increment, which is around 1.2%, the gold price with be stable. I don’t see it coming though.
Very good point in your second paragraph, bb!
Cory…..they took the money out of the reserve….that was to be in trust and a requirement of the IMF, to be in the EU……….DEFAULT, in reality. I think……
ECB has exchanged new money with Greek debt from banks to prepare for the default. If Greek exits, ECB just write off the debt. The impact to system will not be too big. However, Italy better be safe, otherwise risk free for default will crush the confidence for Euro. Euro will be looked as paper tiger. It will approach junk as it should.
Did not know that action by the ECB.
I read an article addressing it about a month ago. It said, ECB has been purchasing Greek bond from banks in order to prepare for the Grexit. It could be bad information. It is hard to believe ECB not taking any action for this obvious issue. It is not a black swan.
Thanks
Maybe but amazingly,,the Euro is still worth more than the US dollar.
It is only the size of the unit. People make much less in number too.
I heard that much of the previous loans went to corrupt officials a year ago and earlier. If so, why doesn’t Greece go after those crooks and take the money back, to help pay off the loan?
That happens to be a great question, Bill! Not sure any of the money would ever come back though.
Merkell is pushing Alexis Tsipras to Putins hands…
If Putin is stupid enough to have him, by all means.
I have just returned from my usual spring traveling in Europe.
One thing is becoming clear: The Greek economy is not as bad as reported……it has gone partly underground because Greeks don’like too pay taxes.
I was in the Halkidiki area and things were pretty normal there.
From chatting to banking and political folks, it appears to me that Greece is preparing to ally itself with the Russian-Asian equivalent of the IMF.
Welcome back CFS! Yes…..the migration to Asian banking continues.
What is very scary to me is that there appears to be a communist-Islamic alliance building in many countries in Europe; noticeable in Greece, Turkey, France, Italy, UK.
Very, very scary!
E.g. Communist students are helping African Muslims at the port of Calais in France to force truckers to smuggle the Africans into England. Similar help is being given to smuggle “refugees” throughout Europe, especially from Italy into other European countries. This seems to be a part of a quasi-organized effort to turn all of Europe socialist/communist.
It is very clear that the governments of Germany, France and UK are increasingly worried, but lack any idea of how to solve the problem.
There is a parallel here with the immigration in the US, where the Hispanic illegal immigration will ultimately turn the U.S. permanently Democratic.
(But then the USA appears to be in decline anyway.)
Our rulers have until the end of the month to find a way to do some more Grease can kicking…my guess is they will find away to kick the can down the road but if not Greece is the word and someone gets Greeced and don’t think it won’t be you…our rulers will find a way to put the ‘mercan taxpayer on the hook!
REAL ESTATE FORECLOSURES are about to be UNCOVERED ………..ZOMBIE houses that are vacant……and foreclosures that people have been living rent free are about to be released on the Market… over 500,000 units hitting the market. see zerohedge .
Yes, I am curious to see how things develop in the real estate market at the interest rates start creeping up. There was an article out today about home sales taking a quick spike as buyers scrambled to close before rates rose any further.
Fun times!
I read an article , which said real estate will be down until 2030, based on the lack of income from the 18 to 27yr. group…..income lacking , jobs, overload on student debt, and postponing togetherness(marriage)…..like you said fun times.
The Millennials prefer to rent over owning. If the interest rates rise to much or too fast, it is very Unlikely new home sales will be good. The problem is they watched everyone get their clocks cleaned in 2007, 2008, 2009 and beyond and then all these pundits starting putting out pieces about how renting is better than owning. Their main premise has been that if you buy a house, the value could drop and you’ll be underwater. They forget to cover the converse side of that where you can buy a house and the value and your equity can go up. They also fail to mention that paying a landlord = 0 equity, and paying down a mortgage is like a forced savings account as you build equity.
Regardless, the Millennials like renting, the Generation Xers bought homes and got over-leveraged and got stuck, and the Baby Boomers have more house than they need and nobody to buy them. Again, if the interest rates do suddenly move higher in 2016 then it will discourage people borrowing at the higher rates (even the though the home values will appreciate). That is why people were rushing to close on homes this week, because of the yields rising in the Bond markets.
But we don’t need to concern ourselves with these petty Fundamental data points 🙂
Shad, these low rates mean real estate is in trouble no matter where you are at some point rates will return to normal about 10 to 12%. Imagine trying to pay a $200,000 mortgage, you will be lucky to have a job and those that do will be under their employers thumb. High personal debt with car loans and credit card balances means when the correction comes the bottom will be unimaginable, I’ve seen million dollar houses correct to $300,000, and that was when the economy was much more vibrant. Debt is slavery!
TORONTO CONDO HOUSING GLUT……….zerohedge
ditto……….DT……..DEBT IS SLAVERY………spot on………..
The debt doubles every 6 yrs. at 12% interest according to the RULE OF 72
SO, YOU will pay 3x plus, to pay a $200,000 mortgage………..or about $750,000 for a $200,000 house…………..what a deal.
Awhile back the blogosphere was saying that should Greece leave the eu gold goes thru the roof.
Thing is we have seen numerous events that “should” affect gold do nothing.
If Greece leaves they should move closer to Russia, things will get better for them and Spain will see what happens, maybe Italy too.