Greek Exit From Eurozone Could Send Gold Prices to $2,000

Release Date: 
Friday, February 20, 2015

Gold and Silver Prices

Gold prices fell this week as investors hoped for a compromise between Greece and the European Union over Greek debt. “Gold was little changed on Friday as investors eyed talks over Greek debt, but the metal was headed for its fourth straight weekly dip as a last-minute deal was expected to break the impasse over the Mediterranean country's bailout programme… Gold had initially seen some safe-haven bids as the uncertainty over the Greek crisis dragged on, but market concerns eased on hopes that a deal would be patched together.” (“Gold treads water as Greek talks eyed; set for fourth weekly drop,” Economic Times, 2/20/19.)

Gold finished the week down $24.00, closing at $1,204.90. Silver prices closed the week at $16.37, down $1.05.

Greek Exit From Eurozone Could Send Gold Prices to $2,000

A recent article in discusses how a “messy” Greek exist from the Eurozone could send gold prices to new record highs.

“If the euro looks under serious threat it could create safe haven demand as happened after Switzerland dropped its currency bombshell in January. Independent research house Capital Economics Head of Commodities Research Julian Jessop expects gold to benefit from a revival of safe-haven demand due to the crisis in Greece and sees gold ending 2015 at $1,400 per ounce adding that in a messy euro break-up scenario, safe-haven demand could easily drive it to $2,000…”

“’[W]e suspect that Greece would rather keep her gold than the euro. After all, recent calls to repatriate German and Swiss gold held overseas (mainly in the US) have illustrated the general public’s attachment to the precious metal. What’s more, in the unlikely event that the Greek authorities were forced to sell gold – either to forestall euro exit, or to raise foreign currency in the subsequent chaos – they would surely find plenty of willing buyers at higher prices.’" (“This chart shows Grexit would send gold price to $2,000,”, 2/17/15.)

Gold Has 30% Upside in 2015: Faber

Marc Faber, editor and publisher of “The Gloom, Boom and Doom,” told CNBC he remains bullish on gold in light of central bank policies. 

“Faber's call is based on his bullish outlook for the precious metal this year, which he expects will trend higher as confidence in the ability of central banks to solve global economic woes dwindles. ’When confidence in central banks finally collapses, then gold has a 30 percent upside potential, easily, this year.’ He said in an interview with CNBC.” (“Dr. Doom’s take on India’s dazzling stock rally,” CNBC, 2/19/15.)

Fox Business Anchor: Fundamentals Point to Higher Gold Prices

Fox Business Anchor Cody Willard explained why he believes the fundamentals support higher gold prices.

“[L]et’s look at the setup for gold over the next few years. The fundamentals all point to higher gold prices in coming years as the 0% interest rates, QE, and all the other games the Fed and the Republican-Democrat regime have played with our money. That said, for the near-term, the dollar being the go-to safe currency — in a world where every major country is trying to devalue their citizen's money — could keep a lid on the price of gold. Compound all those economic tailwinds for gold with the fact that the miners aren't producing much gold these days at these prices….” (“Why gold is a better bet than oil,” MarketWatch, 2/19/15.)

Central Bank Policies Make Gold A Safe Haven Asset

Kira Brecht, managing editor of TraderPlanet, wrote that central banks are voting for gold as the currency of choice by increasing their gold reserves.

“You may have heard the saying: actions speak louder than words. Central banks around the globe are voting for gold with their pocketbooks… But, why gold?...

“Global central banks continue to push the limits on monetary policy in their attempts to battle back against threats of deflation and sluggish growth in key parts of the industrialized world. ‘In a negative or low yield environment, gold performs well,’ says Ashish Bhatia, director of central banks and public policy at the World Gold Council. In this type of environment the ‘opportunity cost [for holding gold] is less and it increases risk for fiat currencies,’ he adds.

“Looking back at action in 2014, Bhatia notes that ‘gold was the second best performing currency after the U.S. dollar. It has no credit risk. It is a deep and liquid market and performs very well in tail-risk events.’”

“As emerging markets central banks look to diversify their reserve assets, which are primarily in either the U.S. dollar and the euro, central banks are ‘looking for safe and liquid currencies to diversify into and gold strikes them as one of the more attractive,’ says Bhatia.” (“Gold: A Safe Haven In A World With Sub-Zero Interest Rates,” Kitco, 2/20/19.)

American Advisor Week In Review

Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program: Will gold be rebounding? Listen to Joe Battaglia’s weekly recap to learn how Greece, Eurozone, Portugal, Spain, Italy, and fighting in the Ukraine/Middle East are playing a major role. Listen to the show below:


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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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