The French bank Societe Generale, in a strikingly worded statement, has advised its clientele and the world that the gold market will be the beneficiary of any fiscal intervention in Europe. Posted by James Randolph on November 30, 2011
SocGen Says Buy Gold as Gold Market Heats Up
November 30, 2011 – The French bank Societe Generale, in a strikingly worded statement, has advised its clientele and the world that the gold market will be the beneficiary of any fiscal intervention in Europe. SocGen has made headlines around the world recently as it has been linked to Greek sovereign debt. The statement from SocGen reads in one way as a “bailout or blowout” ultimatum. A government, any government, according to the language used by SocGen, must intervene in Europe’s sovereign debt problem.
Curiously, the hedge against a systematic default and the best way to profit from a bailout that would prevent the default is gold. It’s perhaps the best recommendation Societe Generale could make in the face of a European debt problem that has prompted Moody’s to say, effectively, it will be cutting the credit rating of several European countries this week. Why a bank needs to have a noose made in Greece around its neck and a judge holding his thumb down in front of the crowd before it tells the truth is another matter.
The rather dire circumstances can add a lot of weight to what SocGen is saying. “Buy gold ahead of QE3 as money creation has a strong impact on [gold] prices.” If that is not far enough on the edge for a major European banking institution with a very long history, there’s more. Societe Generale also said, “Gold = $ 8500/Oz: to catch up with the increase in the monetary base since 1920.”
In other words, gold is grossly undervalued in the current market and prices now are a steal. So much money has been created in the past three to four years that even the amazing growth we’ve seen in gold does not fully balance out with the growth in the amount of dollars. This is pure math, which many have known for a long time.
You may remember when gold rose above $1,000 per ounce, or when it rose above $1,500, and all the while the buzz on the news was the same. Gold is a bubble, George Soros said. Of course, Soros was buying gold at the same time he was saying that on prime time, but surely at least one of those money managers actually believed it. Here, with Societe Generale, we have the exact opposite. A bank on the edge telling it straight: the gold market could go astronomical and no matter what they do in Europe, gold will win big.
Senior Staff Writer – Certified Gold Exchange