Gold Reaches $1,900 Again – Supported by Risk of U.S. Recession, German Euro Risk and Wikileaks China Gold Cables

Monday, September 5, 2011
By Paul Martin

by Tyler Durden
ZeroHedge.com
09/05/2011

Gold Reaches $1,900 Again – Supported by Risk of U.S. Recession, German Euro Risk and Wikileaks China Gold Cables

Spot for immediate delivery rose to $1,903.00/oz as the dollar and all currencies fell against gold in early European trading. Risk aversion has returned due to concerns about the US and global economy and Eurozone contagion.

Gold’s London AM fix this morning was USD 1,896.50, EUR 1,341.13, and GBP 1,174.67 per ounce. The gold fix was higher than Friday’s in all currencies (USD 1,854.00, EUR 1,301.23, and GBP 1,143.81 per ounce).

The very poor employment figure in the United States has led to stock markets in Asia and Europe experiencing quite large falls. Also the exposure of the world’s largest banks to lawsuits which could cost billions is causing market jitters.

Despite continuing denial, a recession in the U.S. is inevitable; the question is only with regard to how deep the recession is and to the nature of the recession – inflationary, stagflationary, hyperinflationary or deflationary.

The consensus, especially amongst Keynesians, is that deflation is most likely. However, given the degree of currency debasement being seen internationally stagflation is also a risk.

Hyperinflation, as being experienced in Belarus today, is the macroeconomic and monetary ‘black swan’.

There are growing concerns that the Eurozone crisis might degenerate again soon due to the Greek debt crisis and risk of default. Over the weekend talks between Greece, the IMF and ECB representatives over new bailout funds broke down.

The euro has fallen and the German local elections have added to concerns over Greece.

The Rest...HERE

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