Another Greek Bailout Plan? What Could Be Impact on Gold?

The Market Gage - Dillon Gage's Precious Metals Newsletter

Recently I have been sharing news about the troubled banking system facing Italy, but it’s time to once again to address the problems facing Greece.

Earlier in February while speaking in front of his party’s central committee, Greece’s Prime Minister Alexis Tspiras sent some choice comments to the German Finance Minister. He said he wasn’t pleased with the “constant aggressiveness” against Greece and his “contemptuous remarks” toward the Greek people.

He also took a shot at the International Monetary Fund, as he put it, for not telling the EU the truth about the requirements for an economic recovery for his country. After many bailouts, Greece is now looking for a another.

This most recent Greece bailout plan is very complex. The main issue is the amount of money that Greece would need to meet its 6.3 billon Euro bond debt due in July. This bailout would reduce the government’s control
over their own economic policy. Obviously they seem to have trouble running their economy and now it’s time
for someone else to take over. I can’t wait to see how the Greek people take this next bit of bad news. This comment would be quite lengthy if I put on paper all the issues of this next bailout.

The point I’m trying to make is that this is one more torpedo to the bow of the European Union’s existence.
If one more country bails out like some of the people of France are threatening, who will be able to support
Italy’s banking problems and Greece’s potential economic collapse. I don’t even want to start explaining the problems facing Portugal’s economy.

That is why the SMART Gold investor must watch the European elections in the coming months and the issues facing Greece, Italy and Portugal. Who can deny that if (or when and it might be sooner than you think – some European economists say it can’t happen) there is one more country voting to exit the EU or have an economic collapse causing a currency crisis, GOLD might be the investment to world turns to.

Please understand I’m not screaming the sky is falling. With a global economy more intertwined than ever, it will not take much for one country in the EU to start a worldwide financial crisis. One must not watch out only for issues in his or hers back yard but have a telescope able to reach around the globe. The world keeps changing minute by minute and we as Americans just can’t put ourselves in an “economic bubble” over the 50 states and say it’s not our problem. I assure you that there are many problems economically facing many nations around the globe and they all have in their possession a very large “pin” that can burst our bubble and do real damage to everyone’s pocket here in America.

To today’s market highlights:

On Friday, even with the gold rally stalling, the gold ETFs added 400,000 ounces – a confirmation that there is a belief that the rally in Gold will continue.

Wall Street gold traders I spoke with this morning have indicated that they flattened out their positions on Friday, taking profits, and now will wait till President Trump addresses congress tomorrow evening before taking on another position. I found it interesting that on Friday as soon as we approached the 200-day moving average selling emerged and we pulled back $ 7 dollars.

Some financial advisors indicated their clients still have a love for stocks and most are not interested in buying commodities at this time. Most advisors say that since the election all the cash on the sidelines has found its way into the equity markets. The question remains, in the event the equity market turns around what will they do with the cash? Some advisors indicated that most of their clients will hold onto their positions until more clarity is shared on corporate and individual tax breaks proposed by the Trump administration. One might assume if he doesn’t deliver as the “Street” expects a sell off will occur in the equity arena.

Technical levels to watch for this morning is the new 200 day moving average at $ 1261.20 spot. This is a level most gold traders will be watching.

Have a wonderful Monday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.