As violent protests resume in Athens, it is worth your time and money to consider the strength of the gold market in the event of a Greek default. Posted by James Randolph on February 13, 2012
The Gold Market When Greece Defaults
February 13, 2012 – As violent protests resume in Athens, it is worth your time and money to consider the strength of the gold market in the event of a Greek default. The most prudent fiduciaries and money managers have been hedging against a Greek default for a year and many will openly tell their subscribers that a Greek default is now a mathematical certainty. A default is technically defined as a sovereign nation paying over 50 percent in interest on its debt, meaning the principle of will never be repaid. Within a few short weeks, Greece will have passed that milestone and we will be in a brave new world.
One of the only markets that will weather the storm is the gold market. Investors have known this since the dawn of time. Gold is the most tangible, most valuable commodity and has been the store of wealth in the world for many, many millennia. In times of troubles, whether it be World Wars or Great Depressions, gold has taken its place on the pedestal of value, time and again.
In modern parlance, we call it safe haven buying. Gold is known as a safe haven asset because it is a safe haven in any storm. However, this says less about gold as a fundamental store of wealth than it does about the quality and substance of other markets. Since the real dawn of paper markets in the 1970’s and especially the 1980’s, we have learned time and again that value stored in paper is worth the paper it’s printed on. It’s just as volatile as anything and certainly less trustworthy.
As the curtains are coming down on the paper markets, partially due to exposure to Greece, gold shines. We will see the inherent value that is stored in precious metals bring the gold market back to its prominence over paper, if we have not already. The paper markets are a game; gold is real. As the problems in Greece reach their final and certain end, in whatever way, the gold market can only respond with an incredible increase in popularity and value as gold retakes its place.
Senior Staff Writer – Certified Gold Exchange