‘Mugabenomics’ From Zimbabwe To The UK – “Gold Is Good”
Wednesday, 3 October 2012
Gold continues to hover near its 11 month high in dollar terms and near new records and the €1,400 level in euro terms.
The lack of confidence over Spain’s finances has kept investors alert as they await a US jobless report on Friday to ascertain just how poorly the US economy is. Recent data suggests that the US economy is in a recession and may be on the verge of a Depression.
Recent disappointing economic data from Australia and China increased speculation of more ‘quantitative easing’ from central banks after Australia’s surprise rate cut yesterday. The Aussie dollar has fallen by nearly 3% already this week after the rate cut.
Although Spain’s Prime Minister Mariano Rajoy denied a Reuters report of an imminent request for a bailout, Spain has taken centre stage in the eurozone debt crisis while Greece, Portugal, Italy and France wait in the wings.
Bill Gross has compared the US government’s reliance on debt financing to a “crystal meth” addict, in the latest in a series of dire warnings from one of the most influential investors in the bond market.
“The US, in fact, is a serial offender, an addict whose habit extends beyond weed or cocaine and who frequently pleasures itself with budgetary crystal meth”, said Gross, who manages the $273bn Total Return bond fund for PIMCO.
Gross places the US in a “ring of fire” that includes countries with precarious finances such as Greece, Spain and Japan. He said that failing to address the problem would ultimately lead to government printing of money and inflation. “Bonds would be burned to a crisp and stocks would certainly be singed; only gold and real assets would thrive within the “Ring of Fire”.”