The jet lag is fading. Some sense of a normal routine is coming back into my life. I must admit, though, the last two days I woke up unclear as to the market starting time. My head kept registering the nine-hour time difference, so I was just a tiny bit confused when I saw the market ticking away at 6:30 in the morning. As I said, though, despite the slight discombobulation, it is good to be home.
Speaking of discombobulating, how about that Greece heading for new elections? No telling what the outcome will be, but as my mother used to say, “Don’t cut off your nose to spite your face.” If Greece does vote in more radicals that push for tearing up the fiscal agreement with the EU, then the end result will be the loss of Greece’s nose. They will exit the Eurozone and go back to the drachma as the coin of the realm. A year ago, I thought this might be catastrophic, but now I see that the other countries in the EU, and, as well, the banks around the world, have had time to prepare for this possibility. If Greece does collapse, the shock will be much less than it might have been. This is another benefit to the slow-go process that has been going on in Europe for some two years now.
This reality makes the upcoming G8 summit a bit less dramatic, although the media would have you think otherwise. The market will move on the coming drum beat news about Greece,which, but the way, holds its next election on June 7th. In fact, the media has already started.
The G8 summit comes as Greeks are pulling cash from banks amid growing fears that it might crash out of the single currency euro zone. Financial markets fear for the future of the entire currency zone, with Spain‘s banking sector also under pressure.
As long as I am in this mood (Didn’t you notice?), what the heck is going on with gold? Shouldn’t it be knocking on the door of $5,000 per ounce? Okay, so let’s chalk up those predictions to crazy-minded, wild-eyed financial experts who simply missed the boat, big time. Then how about $2,000 per ounce by the end of 2011? Oops, that didn’t pan out either. Gold is dropping, and it seems counter-intuitive, as it is a hedge against geo-political shocks and hard economic times.
Gold dropped, headed for its third weekly decline, on signs that Europe‘s crisis is worsening …
So, here is my point. Gold is down and the media is brewing fear. Maybe metal investors sense that Greece exiting the EU might not be as bad as it might have been a year ago. As well, oil prices are dropping and economic data in the US remains stable to improving, which suggests hard economic times are a bit further away. Maybe, after all the hype about gold in the last two years, investors are beginning to sense the worst is over and the inevitable turn of the cycle is coming, albeit a bit long in the tooth.
Trade in the day; Invest in your life
