Much to my surprise the market is up about 65 points this morning and is pushing our goldies up a bit. I suppose there must be some good news out there about the Eurozone - by good I mean something that has the potential to stimulate asset prices. I was not expecting this today.
In the absence of a resolution to the Eurozone woes (even if only semi-permanent) the markets will trend down and holding shares in most companies (goldies included) will be a losing position. Their banks are in even worse financial situation than their governments.
Eurozone banks owe about 30 trillion euros and need 2-3 trillion euros to be recapitalised. Their big banks are much larger than even the big US banks and have the potential to pull Europe's economy and the world economy down the gurgler, in which case the only place to hide is cash until the bottom is reached. Liabilities of Deutsche Bank alone represent 84% of Germany's GDP, the supposed powerhouse of Europe. Once the printing starts, if it does, then its time to go buy up risky assets again, such as goldies/gold.
At present I still hold a lot of goldies because I am expecting that Europe will print, just like the US UK, China, India, Japan etc. having been doing. However, it would be foolish to be fully invested in any sector in the current economic environment. If you have cash then you can survive if the markets (and goldies) do collapse - provided you can access your cash.
Below is a post I made recently on the XJO thread with a link to a very interesting Deutsche Bank publication that gives one important clue why Germany may want to let the ECB print.
loki
"MM
"The same day Ackermann stepped down, Deutsche Bank approached the European Central Bank (ECB) with a presentation titled "The Tipping Point – Time To Call the ECB."
"In short, Deutsche Bank is asking the ECB to monetize everything – or "print, print, print." It says Italy is the "tipping point" of the crisis. Specific mentions of Deutsche's need for capital – the bank's assets equal 84% of German GDP – are absent. Rest assured, without massive government intervention, Deutsche, like most other European banks, will suffer."
From the Stansberry and Associates Digest.
Deutsche Bank's please print money presentation is worth reading:
