In historical terms, when it comes to the eurozone, the Russians are pouring down the Kurfustendamm, and the only thing between them and defeat is a brigade of short-trousered Hitlerjugend. If there was an ounce of decency anywhere in Brussels or Frankfurt, this criminal waste of taxpayers’ money would be stopped now, and nature allowed to take its course. Where is there an Albert Speer when you need one?
The elite gets up to its old tricks as belief in Ireland evaporates.
The cost of insuring against defaults on European government debt surged, led by Ireland, amid concern the bill for bailing out the region’s banking system is growing. Credit-default swaps tied to Irish bonds jumped as much as 30.5 basis points to a record 519 after more than doubling in the past two months. Default swaps insuring Anglo Irish’s senior bonds rose 24.5 basis points to 960.5, a record based on closing prices.
Credit-default swaps on Portugal increased 12.5 basis points to 442.5, close to May 6’s record-high closing price of 461, while Greece climbed 20 basis points to 833 and Italy was up 4.5 basis points at 201.
In such an environment, the logical thing for gold to have done at the market’s opening this morning (BST) would’ve been a further steep rise in price. In fact, it fell off a cliff from $1293, falling seven bucks in the first hour of European trading, before evening out again. This will be dismissed by commentators as ‘profit taking’, but that doesn’t make sense: why take profit on a precious metal whose only way is up?
There was some strategic selling of gold, for sure…almost certainly by the boys in Bankfurt. This could potentially act as some form of protection against mass desertion of the Bonds market in favour of gold, and thus the finger of blame must point at Monsieur Trichet’s piggy bank. And sure enough, the moment New York opened, gold shot up to $1309.
The EU hobgoblins are trying now to do for eurobonds what the US did three years ago to defend the Dollar, but the market is far bigger than the European Central Bank. Anyway, the ECB has clearly been selling gold out of one door and buying both euros and bonds out of another….because the euro hardened against major currencies despite a tidal wave of bad news throughout the Mediterranean and Ireland. Thus, in selling gold and buying euros, Jean-Claude Trichet is up there in the Bonkers League, knocking Gordon Brown off the top spot.