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Greece isn't the problem, Italy is!

Interest-Rates / Global Debt Crisis Nov 05, 2011 - 11:46 AM GMT

By: Bob_Kirtley


Despite surviving a confidence vote (153-145)on Saturday which helped calm a revolt in his Socialist party, this is a hollow victory for the Greek prime Minister, George Papandreou

However the opposition leader, Antonis Samaras, who had demanded Papandreou resign to make way for a new government which would include members of any political party is non to pleased, as his proposals were rejected. 

Sooner or later general elections will be required in order to allow someone with the backing of the people, to take charge and make crucial decisions.

As we see it, the importance of this Greek tragedy is over shadowing a much larger problem, which is the financial mess that Italy now has to resolve.

Italian Prime Minister Silvio Berlusconi was hanging on to power on Friday despite the current rebellious nature of his own party, as they push for action regarding the growing economic crisis. It is alleged that Berlusconi has already lost the numbers he needs to survive as prime Minister of Italy.

The warning signs are in the yields. During Friday's sell-off of Italy's bonds, the 10-year yields for were driven to their highest levels since Italy changed over to the euro, hitting 6.40%. This is something that we have mentioned from time to time as it is a problem that really could be too big to bail, resulting in absolute calamity for the financial markets, the euro, world trade and could be the death of an already fragile recovery.

The bottom line to all of this is that fiat currency is worthless and is currently looking for somewhere to die. Hard assets will retain their value, at least to some extent, as the euro, dollar, pound, you name them, fall from grace.

We have made our survival plans which are firmly rooted in the gold and silver space.

Gold and silver are holding up well, with gold trading around the $1754/0z level and silver trading around the $34.00/oz level this week.

Our projections for gold to trade at $2000/oz this year remain in place regardless of the battering that we are going through.

Volatility is the order of the day and will get worse, shaking out those who have not the stomach for such a ride. The only certainty that we can see is that the oscillations in all sectors will become wilder, as trigger happy traders move at the push of button on news, rumour, gossip, white noise and their very own hunches, as they look to make a buck.

Start your survival planning today, even though you maybe cash constrained, look to ways to reduce your everyday expenditure in order to generate a little capital. Use that capital to acquire assets of value. Our preferred strategy remains unchanged and is prioritized as follows:
  • Physical gold and silver
  • Associated mining stocks
  • Occasional trades in the options market 

There is a general consensus regarding investment whereby a small percentage of your wealth, say 5% to 10%, should be in precious metals. As good as this advice might be, we can only ponder where the lion's share of our wealth would reside. None of the alternative market sectors appeal to us. We are extreme in this respect, and we own no other stocks, outwith the metals sector. Our stance is far too extreme for most people, but this is our fight and we must set our defense accordingly. We all need to take stock and implement plans that are unique to our own predicaments and strengths. We expect those who start now to fair better than those who remain oblivious to the rather grave difficulties that lie ahead.

Chin up and have a good one. 

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

DISCLAIMER : Gold Prices makes no guarantee or warranty on the accuracy or completeness of the data provided on this site. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This website represents our views and nothing more than that. Always consult your registered advisor to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this website. We may or may not hold a position in these securities at any given time and reserve the right to buy and sell as we think fit.
Bob Kirtley Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


05 Nov 11, 19:28
5-10% rule?

"There is a general consensus regarding investment whereby a small percentage of your wealth, say 5% to 10%, should be in precious metals."

No, I don't think that is the consensus. That is the opinion of some armchair "analysts". Specifically it is Nadler's long standing view. That of course is a rubbish stance! What can 5-10% do to protect one's wealth?

An "analyst" recomemending a 5-10% holding is usually a perma-bear who only recommends that because he is trying to cover his arse in the event that gold shoots up and he might otherwise be crucified for being a bear who got it wrong. And "analysts" like Nadler has a compulsion to want to be right all the time.

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