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Eurozone breakup: how would this affect precious metals?

Eurozone breakup: how would this affect precious metals?

2012-MAY-04

As funding pressures and economic distress increase in Spain, talk of a potential breakup of the eurozone has returned. There has been debate as to whether this would be a deflationary or inflationary event, and how it would affect the precious metals markets.

In the event of a breakup, investors need to be prepared for a period of extreme volatility, characterised by chaotic trading conditions in all markets. Similar to 2008 a financial shock such as the failure of the eurozone would likely be met by trading that is more characteristic of panic/liquidation decision-making than fundamentally sound trading. Remember that after the collapse of Lehman Brothers gold traded almost as low as $700 after previously being above $1,000 all while an historic expansion of the Federal Reserve's balance sheet was getting underway. So it will be important to distinguish between short term trading noise and longer-term fundamentals.

With increasing debt burdens and little evidence of a plan to effectively address them, a look around the globe shows few safe havens remaining. Where would capital flee in the event of a eurozone breakup?... Read more>>Eurozone breakup: how would this affect precious metals?




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Whatever happens they will inflate

No politician will allow deflation.

I can tell you they are already talking about more easing(inflation) besides all the hidden inflation they have already caused.
BTW here coffee has gone up almost 100% the last 2 years and I live in a country said to be unaffected yet. Mostly they reduce package sizes so far. LoL

On top of this we have 3 elections that are imminent

1. Greek elections
2. French elections
3. German local elections