Jim Sinclair’s Commentary
With a little help from their friends, who do you think bought the last Greek bond offer and this week’s Spanish offering?
The answer is the "bailout money" and very little other.
ECB must buy ‘hundred of billions’ of bonds to tame Europe’s debt crisis
Fitch Ratings has warned that it may take massive asset purchases by the European Central Bank to prevent Europe’s sovereign debt crisis escalating out of control.
By Ambrose Evans-Pritchard
Published: 8:19PM BST 17 Jun 2010
Brian Coulton, the agency’s head of sovereign ratings, said German members of the ECB appeared to be blocking the sort of muscular intervention in southern European bond markets needed to restore the shattered confidence of investors.
"There has been an unwillingness to follow through, and markets are going to want to see the ECB’s money. It will require hundreds of billions in my opinion," he told a global banking conference.
The ECB agreed to start buying Greek, Portuguese, and Irish bonds in April to help buttress the EU’s `shock and awe’ package, known as the European Financial Stability Facility. Total purchases so far have been €47bn (£39bn).
It has focused its firepower on Greece, mopping up some €25bn of government bonds. This has prevented a collapse of the Greek debt market but at the high political price of letting banks and funds dump their holdings onto the EU taxpayer.
ECB council member Jose Manuel Gonzalez-Paramo said it was "not entirely correct" to assume that the ECB was the sole buyer of the debt. "We will continue buying bonds until the situation has stabilized," he said.
Jim Sinclair’s Commentary
The real story is a 30 year consolidation in junior and intermediate gold shares which is about to break out to the upside.
Think seriously about what a 30 year consolidation formation means.
Finding Gold in the Mainstream
By Frank Holmes, CEO and chief investment officer, U.S. Global Investors
The New York Times dedicated a chunk of last Sunday’s paper to gold as a mainstream investment. In other words, gold is now legit — no longer can it be dismissed as the asset of choice for fringe types with a cellar full of canned goods and a stash of bullion buried in the backyard.
And to illustrate just how far gold has moved into the American mainstream, the paper goes bipartisan by holding up investor George Soros on the left and commentator Glenn Beck on the right as examples of the newly converted.
Now there’s an old saying that the time to sell an investment is when it’s finally “discovered” by the popular media, but that may not be good advice for gold in today’s environment. This week spot gold and gold futures hit all-time highs as the latest government reports cast doubts on the economic recovery.
In its story, the Times points out many of the same gold drivers that we have been citing for a while now – the tandem risks of near-term deflation and longer-term inflation, massive U.S. budget deficits and crushing sovereign debt burdens in Western Europe that threaten the euro’s viability.
