News Header


Markets Sell Off Over Greece Concerns

Release Date: 
Monday, October 3, 2011

Greece announced Sunday that it would miss its deficit reduction targets for this year which were required as part of the Greek financial bailout package. However, the country moved ahead with a controversial budget plan to slash thousands of public-sector jobs to meet the demands of creditors. The news sparked a sell-off in equities and commodities while driving the price of gold higher.

In light of the Greek announcement, European Central Bank member Christian Noyer said on Monday it is unrealistic to expect an increase in Europe's bailout fund beyond what was set in July, but that he is open to options that would allow leveraging to expand capacity.

"After the recent washout, gold positioning is far from extended and this is quite a bullish signal for price strength ahead, said UBS analyst Edel Tully. The 'clean' nature of current [speculative] positions, along with physical and long-term demand, is creating a very healthy foundation for gold to climb from," the bank said. "We expect physical demand to be quite decent in the coming days, barring China where markets are closed for the week, but buyers there should return with vigor after the holidays."

The "financial markets are quite bearish and ongoing concern about Greece is flaring up," said Matthew Turner, a metals analysts at Mitsubishi Corp. Mitsubishi analyst Matthew Turner. "We have got Bernanke speaking tomorrow, we have the ECB rate decision on Thursday and non-farm payrolls on Friday. So it's a data-packed week. You'd think the balance of the news would be gold-friendly… bad economic data and bad economies and loose monetary policy," Turner said.

"Precious metals are expected to trade higher this week and throughout this month as they recover from the late-Sept. selloff," said precious metals and energy analyst at MF Global Tom Pawlicki. "After a poor showing and high volatility in September, metals could recover this week due to favourable quarter-end seasonal patterns, the ongoing uncertainty in Europe, a developing economic slowdown in China, and from the increased potential of a double-dip recession in the U.S."

(Source: "Spot Gold Gains On Euro Debt Fears," Wall Street Journal, October 3, 2011; "PRECIOUS-Gold rises for third day after Greece rocks markets," Reuters, October 3, 2011; "PRECIOUS-Gold extends gains, equities drop on Europe debt fears," Reuters, October 3, 2011)

News Footer


†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.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

To receive free information package on gold and precious metals investing, call Goldline at 1-800-963-9798.