Euro Crisis: Impact on Gold

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Gold, of course, rises and anything else that involves costs billed in firmer currencies. Europe will not have austerity, it will try and nibble away at the edges but that won’t be enough to halt the slide. Meanwhile, even the mild austerity that will get dished out will be punished at the ballot box.

The major currencies of the world will rebase as countries wriggle and twist out of their debts. So once again, woe betide the savers. Meanwhile, the borrowers and carefree spenders will thrive in a low-interest rate, inflationary world.

From an investment point of view, it is therefore sensible to borrow and spend on hard assets. Let inflation deal with the debt. This is hardly a novel concept but it is one that will come to the fore.

In such an environment of suspended free markets, is it any wonder that investment banks like JPM go ‘all in’ in their trading, when governments all around are going ‘all in’ on monetary expansion.

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