Spain has now replaced Greece as the leading crisis nation in the euro market with their closure of their third-largest bank due to insolvency. The nation is currently at a critical stage point and Spain’s ex-premier sums it up as “We’re in a situation of total emergency.” This is the worst situation Spain has faced since the end of the Franco dictatorship.
This also led to the resignation of the central bank governor, Miguel Ángel Fernández Ordóñez, who testified to the senate that he had been muzzled to avoid enflaming events as confidence in the country drains away. All in the wake of the 23.5 billion euro rescue of the bank.
Whether or not there will be another European Central Bank rescue to come for Spain one is thing is certain there has been somewhat an increase interest with the dollar. Which also presents a lucrative situation for gold sitting in the $1,600 range and ready for another bull market push.
“There are plenty of [gold] bulls out there,” Mitsui analyst David Jollie said. “They are waiting for a trigger to send the price higher, and the question is, what’s that trigger? It could be quantitative easing; it could be a short period of euro stability; it could be the Greek elections.”
There are also some areas in Germany that are eyeing gold reserves to assist ailing EU nations in their debt crisis. A pledge in which 20 percent each state would have to declare of its debt as collateral. Only to be used in the event the country is not able to meet their payment obligation. This also includes the debt-burdened nations like Italy where their gold-rich position would be important in using the precious metal as a secure collateral.
Looking to the U.S., there also has not been any economic recovery that has change the economic statistics so far this year. Unemployment rose to 8.2% as a result of May’s job report of only 69,000 new jobs and representing a 76 percent decline and very far from the 200,000-plus seen in early-2012.
The latest U.S. economic figures coincide with Sprott Asset Management strategist John Embry in his point he recently declared. “I spent a lot of time studying the real U.S. economic statistics and I don’t think there’s any recovery of any substance whatsoever.”:
• U.S. GDP grew at only a 1.9% pace in the first quarter, revised downward from 2.2%.
• Jobless claims rose by 10,000 to a seasonally adjusted 383,000 in the week ending May 26 — the highest level in more than a month.
• The latest ADP report shows private-sector payrolls increased by only 133,000 in May.
• The Chicago Business Barometer fell in May to the lowest level since September 2009.
So with quantitative easing to be expected after the Federal Reserve meeting June 19-20 will come another push for gold above the current market reading. Expectations of QE3 rate are likely due to the struggling stock market Treasury returns and Eurozone nations about to implode over rising uncontrollable debt.
So the push is on for gold to make its valiant bull market return and all the indications of are there for it to once again to occur. What we will be watching for is the Feds to opt for another round of quantitative easing and the the ECB to join in with their Long-Term Refinancing Operation. As we have seen with gold’s history it has had a rallying situation for the last 10 years and included were a number of other factors not just QE, but QE has never hurt gold’s situation for a bull market return.