Precious Metals bullish trend in place
Precious Metals, particularly gold, have a long-term trend in place. In light of the global debt crisis that is no where close to being resolved and in fact continues to deteriorate by the day, the demand for physical gold and other precious metals will remain stronger than ever. As with every investment, timing is crucial and separates those who know what is going on.
We are heading towards the holiday and shopping season of the year, at least in the western world. Traditionally gold prices as well as silver prices tend to rise during this time. Considering the seasonality effect, both gold and silver prices should rise shortly.
Banks and major financial institutions are heavily exposed to the European sovereign debt. As the European crisis unfolds, there will be a domino effect and the damage will spread across the global banking sector. Unfortunately the financial crisis at hand is not an isolated problem. It is not simply a bank or a financial institution that could simply be cutoff and everything will be fine. If a bank goes under, we should be worried that other banks or financial institutions may go under too. This was the primary reason back in 2008 and 2009 the US government decided to bailout AIG, the largest insurance conglomerate in the country. Allowing AIG to fail would have meant allowing a number of other banks, financial institutions, and even countries to go bankrupt.
European Bailouts Likely
The European Central Bank (ECB), like the US Federal Reserve (Fed), will be printing trillions of Euros to bailout insolvent banks. According to some estimates, the ECB will create nearly 3 trillion Euros in the near future. It is estimated that the financial institutions in the Eurozone have an exposure of approx. $600 trillion in global derivatives. In the event of a Eurozone collapse, the impact will be far and deep.
As was the case back in 2008 and 2009 in the US, today Europe's banks cannot access funding. Out of all major banks, Unicredit holds the highest amount of toxic debt.
Warren Buffett said yesterday that Europe's debt crisis had shown a major flaw in the 17-member euro zone system. €There is a major flaw in the euro system €¦ I do know the system as presently designed has a major flaw and that flaw won't be corrected just by words,€ he told CNBC during his first trip to Japan on Monday.
US Debt Problems Unresolved
The US lawmakers setup as a special debt-reduction committee announced failure to reach agreement and dissolve congressional gridlock. The tax and spending issues have now moved into 2012 election year, which is very critical for the Obama administration. The committee essentially remained unresolved on at least $1.2 trillion of deficit reduction.
According to Senator Jon Kyl of Arizona, €The next election certainly will have a big bearing on the question of what's the scope and size of the federal government, and do we want to try to tax our way out of this or grow our way out.€
2011 is about to end. The climate we are entering is strong precious metals bullish. Seasonality and the Eurozone debt crisis will make the next couple of months exciting in the precious metals market. Investors will be looking to buy the dips especially in gold and silver.
We are heading towards the holiday and shopping season of the year, at least in the western world. Traditionally gold prices as well as silver prices tend to rise during this time. Considering the seasonality effect, both gold and silver prices should rise shortly.
Banks and major financial institutions are heavily exposed to the European sovereign debt. As the European crisis unfolds, there will be a domino effect and the damage will spread across the global banking sector. Unfortunately the financial crisis at hand is not an isolated problem. It is not simply a bank or a financial institution that could simply be cutoff and everything will be fine. If a bank goes under, we should be worried that other banks or financial institutions may go under too. This was the primary reason back in 2008 and 2009 the US government decided to bailout AIG, the largest insurance conglomerate in the country. Allowing AIG to fail would have meant allowing a number of other banks, financial institutions, and even countries to go bankrupt.
European Bailouts Likely
The European Central Bank (ECB), like the US Federal Reserve (Fed), will be printing trillions of Euros to bailout insolvent banks. According to some estimates, the ECB will create nearly 3 trillion Euros in the near future. It is estimated that the financial institutions in the Eurozone have an exposure of approx. $600 trillion in global derivatives. In the event of a Eurozone collapse, the impact will be far and deep.
As was the case back in 2008 and 2009 in the US, today Europe's banks cannot access funding. Out of all major banks, Unicredit holds the highest amount of toxic debt.
Warren Buffett said yesterday that Europe's debt crisis had shown a major flaw in the 17-member euro zone system. €There is a major flaw in the euro system €¦ I do know the system as presently designed has a major flaw and that flaw won't be corrected just by words,€ he told CNBC during his first trip to Japan on Monday.
US Debt Problems Unresolved
The US lawmakers setup as a special debt-reduction committee announced failure to reach agreement and dissolve congressional gridlock. The tax and spending issues have now moved into 2012 election year, which is very critical for the Obama administration. The committee essentially remained unresolved on at least $1.2 trillion of deficit reduction.
According to Senator Jon Kyl of Arizona, €The next election certainly will have a big bearing on the question of what's the scope and size of the federal government, and do we want to try to tax our way out of this or grow our way out.€
2011 is about to end. The climate we are entering is strong precious metals bullish. Seasonality and the Eurozone debt crisis will make the next couple of months exciting in the precious metals market. Investors will be looking to buy the dips especially in gold and silver.
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