Written by The Gold Enthusiast (https://thegoldenthusiast.com/)

Just when everyone was ready to give up on gold – that “ancient relic” — suddenly rebounded back above 1,200.  That’s right, gold popped back above $1200 USD per oz in early New York trading, and is presently cruising sideways above that mark.

gold chart, gold activity

Source: Kitco.com

The credit for this pop goes to Italy, which is trying to stave off heading down the same path as Greece.  During 10 minutes after news of Italy’s lack of progress in their credit woes, traders drove gold and silver prices back up above 1,200, which you can see in the chart above.

“Geopolitical uncertainty” is a phrase every trader needs to keep in mind.  The past 10 years have arguably been the most prosperous time in US market history, certainly in the past 50 years.  Even in the midst of the good times there is always a black swan that can appear and wreck the party.  Whether it’s runaway deficit spending, wars, or banks overextending themselves, traders and investors need to stay aware of pending threats to the good times.

This Gold Enthusiast doesn’t think that Italy will tank overnight; the EU has too much riding on it.  The old axiom that those in power will do whatever is necessary, to stay in power, applies here. The EU central bankers are making warning noises toward Italy as the country tries to sell bonds abroad to stay afloat.

It’s kinda funny actually because that was exactly the strategy the ECB used to float Greece.  Despite their current warning noises, we can expect the EU central bankers to “help” Italy find low-interest credit, probably strong-arming other members of the EU to buy (junk) Italian bank bonds. Or even go to more extremes…  But like what happened with Greece, eventually they will run out of other people’s money, and Italy will have a reckoning.

Or, if the ECB does “mutualize” debt as discussed in the previous article, the whole EU will have some very rough times.

But that will take some time yet.


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