Gold Near Record USD And EUR High – Eurozone Debt And U.S. Default Risks Global Financial Contagion
by Tyler Durden
From Gold Core
Investors were made nervous by comments from chemicals major BASF, which said it saw global economic growth slowing as it posted weaker-than-expected earnings, sending its stock down 4.9%.
Siemens AG, Europe’s largest engineering conglomerate, warned that global economic risks were increasing and posted below forecast results. Its shares fell 1.3%.
As per yesterday, Spanish and particularly Italian bonds are under pressure today with the Spanish 10 year rising to 6.06% and the Italian 10 year rising to 5.94%.
One-year CDS (credit default swap) prices on U.S. debt have moved above five-year CDS prices, signaling that the risk of financial contagion remains real.
Europe’s STOXX bank index has lost about 25 percent since mid-February suggesting jitters regarding the possibility of a second phase to the banking crisis.
The Dow to Gold Ratio has again turned down suggesting gold may continue to outperform U.S. stocks and the DJIA, in particular, in the coming weeks. The long term target of below 2:1 remains viable.