Here's the Daily Pfennig take on Cyprus and gold, etc. Nothing to astonish you, but an indication that not everybody's thinking in jimmy's apocalyptic terms about Cyprus and gold. This aft, eg, the metal's nodding off in its wheelchair.
<<Ultimately I think the Russians will come up with a deal to help Cyprus raise the euros the EU has demanded. I have heard Russian leaders are very interested in purchasing a stake in the big gas fields Cyprus found in waters adjoining Israel. And you can bet China would also be interested in that gas field, so Cyprus has a few options on coming up with the billions of euros needed. Banks will probably remain closed until a resolution is reached, and for now it looks like the crisis will be contained to the tiny island. Depositors in Italian and Spanish banks have not made a 'mad rush' to withdraw their deposits.
This crisis again highlights the need for a 'supranational banking regulator' for European banks. Yesterday, EU lawmakers took another step toward this, passing legislation which would turn the ECB into a supervisor, paving the way for the ECB to provide direct bailouts to banks. This a first step in the broader plan to build a European banking union that would create a central authority for resolving failed lenders; similar to the FDIC here in the US. Here in the US, failed banks are shut down on Friday and re-opened on Monday with depositors money shifted into a 'stronger' institution which has agreed to take them over. This system worked well during the financial crisis here in the US when we saw a record number of bank closures but depositors largely maintained their faith in their financial institutions.
The euro was helped out a bit this morning with the release of German investor confidence with unexpectedly rose in March. The ZEW Center for European Economic Research said its index of investor confidence rose to 48.5 from 48.2 in February. That is the highest reading since April of 2010 and suggests Europe's largest economy will return to growth. . . . Gold held on to the gains it booked this week staying above $1,600 for a fourth day. If it is able to book additional gains today, that would mark the fifth consecutive day of higher prices, its longest winning streak of 2013. But gold could reverse direction if FOMC policy makers give any indication that the stimulus will be pared down in the coming months. Precious metals prices could also see a drop if Russia or China rides to Cyprus' rescue. Gold continues to be seen by many as a 'safe haven' and the re-emergence of the European debt crisis has helped move prices higher.>> |
