Moody's Investors Service downgraded Greece's debt from A3 to Ba1, officially classifying the worst-hit member of the euro-zone as a "junk" bond risk.
The Dow immediately plunged almost a hundred points after the news, undermining its strong performance early in the morning. However, the downgrade was far from unexpected - despite austerity measures and a massive if belated bailout by the EU, Greece's financial situation remains dire and it threatens to bring other countries, like Spain and Italy, down with it.
The downgrade will make it harder then ever for Greece to maintain the unsustainable cycle of borrowing to pay the debts coming due, possibly accelerating some kind of general default and contagion throughout euro-zone and global markets.
The euro crisis pushed gold to record levels last week, and further debt scares might light another fire under the price this week. Dealer gold and silver, along with other precious metals like platinum and palladium, represent an attractive and stable alternative to the debt-ridden paper currencies like the euro and the dollar. Irrational exuberance in the stock markets may depress the price of gold for a little while, but one way or another, Greece's debts will have to be paid. The ensuing chaos in the markets could well push dealer gold to fresh highs.
Showing posts with label greek. Show all posts
Showing posts with label greek. Show all posts
Wednesday, June 16, 2010
Tuesday, May 25, 2010
Superior Gold Group - Greek debt outlook offers many uncertainties
Economists appear to be divided on the prospects for a Greek debt default, according to recent survey data from the National Association for Business Economics.
The data found that 51 percent of economists surveyed do not believe that Greece will default on its debts, even though there is more of a consensus that the country will also need to restructure some debt to keep this from happening.
Another 12 percent in the survey said that they expect Greece to default on its debt in the next year, while 37 percent believe that a default will occur beyond that point after what is described as "short-term maneuvering" allows some extra time.
"Although risks involving Europe have recently escalated, the outlook in this country has improved in most respects. Growth prospects are stronger, unemployment and inflation are lower, and worries relating to consumer retrenchment and domestic financial headwinds have diminished," said NABE President Lynn Rea.
Rea added that economists polled by NABE indicated that are "extremely concerned about large federal deficits going forward."
A Greek debt default could have considerable financial implications for world markets since it could expose a number of banking institutions, especially European ones, to billions of dollars in new financial losses. This would come at a particularly inopportune time since world markets have largely been moving beyond the recession of the past couple of years.
Greece ran up an unsustainable budget deficit in recent years and past governments have been accused of basically cooking the books in order to create the illusion of complying with European Union debt standards.
Also generating concern in Europe have been Spain and Portugal, which experienced their own recent credit rating downgrades and which have been taking steps to lower their budget deficits. Other countries, including England and Ireland, are expected to cut costs in the coming months in order to lower concerns about their own debt levels.
The NABE report added that economists are extremely concerned about the size of the U.S. deficit as well. Still, the economists projected that the employment situation will continue to improve in the coming months, while the gross domestic product is now expected to rise by 3.2 percent for both 2010 and 2011.
With uncertainty remaining very much a reality in world financial markets, now may be a good time to consult with silver and gold dealers about reliable investment options.
The data found that 51 percent of economists surveyed do not believe that Greece will default on its debts, even though there is more of a consensus that the country will also need to restructure some debt to keep this from happening.
Another 12 percent in the survey said that they expect Greece to default on its debt in the next year, while 37 percent believe that a default will occur beyond that point after what is described as "short-term maneuvering" allows some extra time.
"Although risks involving Europe have recently escalated, the outlook in this country has improved in most respects. Growth prospects are stronger, unemployment and inflation are lower, and worries relating to consumer retrenchment and domestic financial headwinds have diminished," said NABE President Lynn Rea.
Rea added that economists polled by NABE indicated that are "extremely concerned about large federal deficits going forward."
A Greek debt default could have considerable financial implications for world markets since it could expose a number of banking institutions, especially European ones, to billions of dollars in new financial losses. This would come at a particularly inopportune time since world markets have largely been moving beyond the recession of the past couple of years.
Greece ran up an unsustainable budget deficit in recent years and past governments have been accused of basically cooking the books in order to create the illusion of complying with European Union debt standards.
Also generating concern in Europe have been Spain and Portugal, which experienced their own recent credit rating downgrades and which have been taking steps to lower their budget deficits. Other countries, including England and Ireland, are expected to cut costs in the coming months in order to lower concerns about their own debt levels.
The NABE report added that economists are extremely concerned about the size of the U.S. deficit as well. Still, the economists projected that the employment situation will continue to improve in the coming months, while the gross domestic product is now expected to rise by 3.2 percent for both 2010 and 2011.
With uncertainty remaining very much a reality in world financial markets, now may be a good time to consult with silver and gold dealers about reliable investment options.
Wednesday, April 14, 2010
Greece bailout might increase gold prices
The recent plan to help bail out the struggling Greek economy will have a positive effect on the gold market.
That's the assessment of GFMS Ltd. Executive chairman Philip Klapwijk, who, according to Bloomberg News, told a precious metals meeting that gold could reach up to $1,300 per ounce as investors look for alternatives to bonds.
By the end of trading Monday, gold had slipped from a high of $1,170.70, to close the day at $1,160.10.
Analysts like James Moore from thebulliondesk.com feel that there is still plenty of growth potential for gold.
"Gold still needs to close above $1,162 to confirm the upside breakout," Moore said in his daily metals report Monday, according to The Street. "Gold still has room before entering overbought territory and is well placed to push on towards the $1,200 mark."
However, the earlier sentiment about gold prices was tempered by a revision in the 2010 and 2011 gold forecast by Goldman Sachs. Although the bank still sees gold hitting record highs in 2011, it reduced its 2010 forecast from $1,265 to $1,165 an ounce and its 2011 numbers to $1,350 an ounce from an earlier forecast of $1,425.
That's the assessment of GFMS Ltd. Executive chairman Philip Klapwijk, who, according to Bloomberg News, told a precious metals meeting that gold could reach up to $1,300 per ounce as investors look for alternatives to bonds.
By the end of trading Monday, gold had slipped from a high of $1,170.70, to close the day at $1,160.10.
Analysts like James Moore from thebulliondesk.com feel that there is still plenty of growth potential for gold.
"Gold still needs to close above $1,162 to confirm the upside breakout," Moore said in his daily metals report Monday, according to The Street. "Gold still has room before entering overbought territory and is well placed to push on towards the $1,200 mark."
However, the earlier sentiment about gold prices was tempered by a revision in the 2010 and 2011 gold forecast by Goldman Sachs. Although the bank still sees gold hitting record highs in 2011, it reduced its 2010 forecast from $1,265 to $1,165 an ounce and its 2011 numbers to $1,350 an ounce from an earlier forecast of $1,425.
Monday, April 12, 2010
Greek credit rating downgraded over debt
People who have been considering investments in dealer gold as a way to wait out any upcoming economic difficulties may have gotten further motivation this week when Fitch Ratings downgraded Greece's credit rating.
Greece has been alarming investors for weeks amid speculation that it will be unable to cover its future debt obligations, largely because of a budget deficit that is far above the level deemed permissible by European Union standards.
There has been growing speculation that the country will require a financial bailout package from either the EU or the International Monetary Fund if it is to get its fiscal situation back under control.
Further complicating the matter has been the unrest among some workers in Greece that proposed budget cutbacks have led to. There have also been reports in recent days of wealthy Greeks withdrawing their deposits from the country's banks, which could make it even harder to get back to fiscal health.
In the latest development on this situation, Fitch Ratings indicated Friday that it had downgraded Greece's long-term default ratings to BBB- from BBB+ with a negative outlook.
"The downgrade reflects the intensification of fiscal challenges in response to more adverse prospects for economic growth and increased interest costs. It also reflects ongoing uncertainties about the government's financing strategy in the context of increased capital market volatility," explained Fitch, adding that the country also faces a "sharp rise in interest rates" as well as a weaker outlook for economic growth.
The credit rating company acknowledged that there were also "some early indications of improvements in fiscal outturns and the strength of the government's commitment to fiscal consolidation measures."
For Greece, one of the biggest financial problems in the coming months could be an elevated cost of borrowing brought on by the rating downgrade and other factors.
Looking ahead though, Greece may be just one of a number of nations around the world with ticking debt time bombs. Spain and Portugal are widely cited for their own possible deficit woes, while even the United States has not been immune to speculation that it could end up struggling to meet debt obligations in the coming years.
For investors who are wary of these disturbing financial prospects, one option could be to consult with silver and gold dealers about the stability that investing in precious metals can offer in the current fiscal climate.
Greece has been alarming investors for weeks amid speculation that it will be unable to cover its future debt obligations, largely because of a budget deficit that is far above the level deemed permissible by European Union standards.
There has been growing speculation that the country will require a financial bailout package from either the EU or the International Monetary Fund if it is to get its fiscal situation back under control.
Further complicating the matter has been the unrest among some workers in Greece that proposed budget cutbacks have led to. There have also been reports in recent days of wealthy Greeks withdrawing their deposits from the country's banks, which could make it even harder to get back to fiscal health.
In the latest development on this situation, Fitch Ratings indicated Friday that it had downgraded Greece's long-term default ratings to BBB- from BBB+ with a negative outlook.
"The downgrade reflects the intensification of fiscal challenges in response to more adverse prospects for economic growth and increased interest costs. It also reflects ongoing uncertainties about the government's financing strategy in the context of increased capital market volatility," explained Fitch, adding that the country also faces a "sharp rise in interest rates" as well as a weaker outlook for economic growth.
The credit rating company acknowledged that there were also "some early indications of improvements in fiscal outturns and the strength of the government's commitment to fiscal consolidation measures."
For Greece, one of the biggest financial problems in the coming months could be an elevated cost of borrowing brought on by the rating downgrade and other factors.
Looking ahead though, Greece may be just one of a number of nations around the world with ticking debt time bombs. Spain and Portugal are widely cited for their own possible deficit woes, while even the United States has not been immune to speculation that it could end up struggling to meet debt obligations in the coming years.
For investors who are wary of these disturbing financial prospects, one option could be to consult with silver and gold dealers about the stability that investing in precious metals can offer in the current fiscal climate.
Wednesday, April 7, 2010
Greek budget ripples continuing to be felt
Greece is continuing to affect the value of the Euro with its sovereign debt problems, while also giving investors a glimpse of what could be things to come if other nations, such as the U.S., end up on a similar path in the future.
A Wall Street Journal report noted that early this week, the cost of insuring Greek government debt went up significantly, in part due to questions about whether the country will require a bailout from the International Monetary Fund and whether it has the resources to funds its own budgetary needs at this point.
The financial newspaper noted that the yield on Greek 10-year government bonds was up to 7.1 percent, which was said to be 3.97 percentage points higher than Germany's. The Journal also cited concern among investors who have noticed a trend of wealthy Greeks withdrawing their money from the country's banks, which could result in a decline in available capital.
While U.S. officials have long downplayed the idea that the government will ever default on its own credit obligations, the country already spends hundreds of billions of dollars each year just to pay interest on the national debt.
Given what may eventually prove to be an unsustainable financial climate, investors who consider dealer gold may find themselves better shielded from any fiscal instability in the coming years.
A Wall Street Journal report noted that early this week, the cost of insuring Greek government debt went up significantly, in part due to questions about whether the country will require a bailout from the International Monetary Fund and whether it has the resources to funds its own budgetary needs at this point.
The financial newspaper noted that the yield on Greek 10-year government bonds was up to 7.1 percent, which was said to be 3.97 percentage points higher than Germany's. The Journal also cited concern among investors who have noticed a trend of wealthy Greeks withdrawing their money from the country's banks, which could result in a decline in available capital.
While U.S. officials have long downplayed the idea that the government will ever default on its own credit obligations, the country already spends hundreds of billions of dollars each year just to pay interest on the national debt.
Given what may eventually prove to be an unsustainable financial climate, investors who consider dealer gold may find themselves better shielded from any fiscal instability in the coming years.
Subscribe to:
Comments (Atom)