Europeans Buying Gold in Droves
November 17, 2011 – As the Greek and Italian Prime Ministers both step down this week, it is now being reports that European demand for gold skyrocketed 135% in Q3 of this year. The troubles associated with the Greek debt crisis are very well known and publicized, though the conclusion is far from foreseeable. However, Italy’s fiscal problems have largely been out of the press besides the troubled Italian bank UniCredit, which is one of the most heavily involved in Greek debt.
The creeping problems in the European Union really kicked off last spring with riots in Athens as austerity measures came onto the scene and now with the Q3 numbers out we see the expected results. Investors have wisely chosen to move their money safely out of the embattled European banking establishment and into the safety and promise of gold.
Sadly, things have gotten much worse for Greece since spring and despite a bailout from Germany there is still a very real danger Greece will default. The situation in Athens is such that a reporter for the Telegraph has detailed the city at a standstill where a hit of crack can be purchased by former workers for 5 Euros, the homeless line every doorway, and anyone with the ability or the tenacity to leave already has.
It’s difficult to see, at this point, how Greece will effectively deal with its sovereign debt problem. Papandreou’s resignation is a signal in itself. However, we have seen how investors will react. It is highly unlikely there will be a total jubilee in the European Union in the next six months. If the problems of the last six months have led to a 135% increase in demand for gold, gold is a pretty sure bet in the future.
The investment demand in Europe is strongly tied to investment demand in the US. We are all affected by it, though not every investor in the US is motivated as strongly as those who know the problems in Athens firsthand. But those who see how Europe has been affected by its debt problems and how investors have responded by buying gold are thus forewarned and forearmed as to how to protect themselves and prosper. More debt problems in Europe or elsewhere signal more demand for buying gold now.
Senior Staff Writer – GoldPrice.net