Bank on Credit Suisse Gold Posted by James Randolph on April 20, 2012
The news out of Europe is troubling at best, but it gives a new meaning to the idea of
Credit Suisse gold and what it could mean for you. As of today, the entire European
Union is negative for the year. The Italian equities market is dragging down the entire
Union, which is generally the fear of establishing such a large bloc of a monetary union.
The IBEX, as the Italians have dubbed it, is near March 2009 lows, which is the ides of
March to anyone in finance. That was the line in the sand for the entire financial industry
and the American economy at large and there is a substantial European index that is
nearing that line.
The speculation on the health of Europe and its effect on the American recovery is
relatively mute. This is the biggest story for the American dollar that there is out there.
Beyond the disaster, alleged crime, and missing customer funds at MF Global, the risk
and exposure of European debt to American banking and finance is yet to be realized. In
the opinions of some, the MF debacle was more than enough of a message as to the effect
of European sovereign debt.
Certainly, the message was loud and clear in the gold market. The spot price surged on
the MF Global news, putting an end to a correction that began after the all-time nominal
high in the gold price on September 6, 2011 at $1,923 per troy ounce of gold. Perhaps
that correction should’ve dragged on for a bit longer without the failure of the major
American banking institution and the interrupt gave rise to some of the volatility we’ve
seen in the overall gold trend since.
However, the fundamental of gold serving as a bona fide safe haven asset in the wild of
the market is clear and that lesson should stay with us for the future. Any investments
denominated currencies or the financial papers of Wall Street will ultimately realize
the losses of MF Global because they are all exposed. A small Credit Suisse bar bought
before the October 31st failure of MF Global gained in value during the crisis and has not
lost any real value to date.
This is the best real world explanation of the way gold is underlying the entire financial
system as a real base of wealth that we will eventually rely on when other instruments
experience trouble. In such a system, it would ultimately make sense to store as much
wealth as possible in gold. At the very least, diversify your portfolio and your financial
assets with a few bars of Credit Suisse gold and rest a little more relieved.