October 3, 2011 - The big news in the markets Monday was the news that Greece will not be able to make its budget deficit reductions that it set out for itself just a few months ago. This is troublesome because it is an indication that the bailout measures Greece has already received may not be enough to keep the Mediterranean country solvent.
So far, Greece has been receiving the most help from Germany, but it is unclear whether Germany will be able or be willing to provide further assistance. The Chancellor of Germany, Angela Merkel, has been losing ground in regional elections because of her controversial and politically unfavorable support of the bailout package. The austerity imposed on the German people to bolster the Mediterranean nation is extremely unpopular among the German voters and the actions already forced through have created extreme resentment.
The effect of this situation on the world stock markets was quite negative. US stocks were down over 1% during intraday trading, China’s Hang Seng was down 4.4% overnight, and the FTSE was down 1.9%. The Euro sank to an 8½ month low against the dollar in the FOREX currency exchange.
Gold showed a sturdy gain, however, up over $30 in intraday trading. This is a reflection of sensible investors seeking the most stable haven during the Greek crisis. Following last week’s loss in stocks and today’s news out of Greece, investors are moving towards the certainty and predictability of the gold market as a logical way to shelter assets during the storm. This movement is expected to continue as the Greek situation progresses.
Senior Staff Writer – GoldSilver.org