At the time of this report the price of Gold is trading down slightly. Mixed indicators of a softer U.S. dollar and higher U.S. Treasury yields seemingly keeping the price of Gold in place.
Gold ETF’s have seen redemptions in ten of the last eleven days keeping the price of Gold from gaining any momentum.
CME Silver warehouse stocks continue to increase as refiners still finding the exchange the best vehicle to turn their Silver outturns into cash.
Italy in Crisis
Italian bonds experienced a steep sell off on Tuesday, sending their yields on their two yield bond to the highest level in four years.
Italy’s Central Bank Governor Ignazio Visco said that “the destiny of Italy is that of Europe,” as a political uncertainty threatens to drag the Eurozone’s number three economy into a new crisis.
He went on to say that “it is important that the voice of Italy is authoritative in contexts where the future of the European Union is decided,” referring to upcoming decisions at the EU regarding the governance of the bloc, multi-year budgets and the revision of financial rules.
Visco’s annual address on the state of the Italian economy came as a new premier designate of what would be a non-political government of technocrats was preparing to present his Cabinet list to Italy’s president. Populist parties, meanwhile, are enraged that their attempts at forming a government foundered on their choice of an anti-euro economy minister. Visco warned that investors would flee the system if they see their savings lose value because of an economic crisis, noting that “foreign investors would be the quickest.”
Currently, Italy has the highest debt in the Eurozone, which at 132 percent of its GDP is twice that of Germany’s and significantly higher than the rest of the Euro zone at 87 percent. Its banking sector continues to experience many bad uncollectable loans. Italy is too big to fail and too big to bail out, so this can become a big problem for the ECB.
We need to watch these developments closely because any disruption in Italy’s banking system will have a direct impact on World Financial Markets and the price of Gold.
Have a wonderful Wednesday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. 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. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.