Surge to own gold and silver a worldwide phenomenon as doomsday nears
The doomsday scenario resulting from multiple national defaults is horrific to contemplate and more and more people are at last beginning to climb into gold and silver as protection .
Author: Lawrence WilliamsPosted: Thursday , 23 Jun 2011
LONDON -
As the implications of the global financial crisis are at long last beginning to filter through to the general public, the move to dump cash and other savings forms in favour of gold and silver - notably in the easily accessible and sellable coin form is now really beginning to gather momentum and is becoming a major driver of the precious metals markets.
We have long known that the rising, and rapidly expanding, middle classes in Asia have an almost inbuilt propensity to keep a significant proportion of their savings in gold while the less costly silver is now beginning to come into the equation. This has been emphasised recently with the news that the people's Bank of China has already had to virtually more than double its minting of its gold and silver Panda series of coins, despite the previous quota for this year itself already being double last year's with the populace buying gold and silver as a hedge against the onset of inflation there.
Now we hear that the Perth Mint in Australia has been selling record numbers of silver coins so far this year and although we don't have figures yet, gold coin sales there are also said to be at record numbers.
In the U.S., the U.S. Mint has been reporting record sales levels of its gold and silver coins, while we hear that, not surprisingly, the Greeks are flocking to purchase gold and silver in the midst of their financial crisis as their trust in banks has virtually disappeared.
Indeed it is this last factor which really should be in the mindset of anyone who is looking to wealth protection in the current economic crisis virtually wherever they may be located. The general consensus is that there will inevitably be a Greek default, if not next week, when parliament has to vote on the hugely unpopular austerity measures, but before long as even with a temporary EU and IMF bailout, the figures do not suggest that a default can ultimately be avoided.
French and German banks in particular are hugely directly vulnerable to a Greek default, but it is the indirect exposure that could be truly frightening for the whole of western society. As was the case with Lehmann Brothers the tentacles of a major bank collapse spread globally - and the Greek situation is far worse than Lehmann. The other knock-on effect of a Greek default is that those banks still left in business will be jacking interest rates to the other PIIGS economies sky high in fear that they will default as well - which of course in itself could drive them to default as there is then no way they could service their debts. In the dog-eat-dog world of current finance it is difficult to see sufficient co-operation between the banks to avert this - no bank will trust another not to go down so interbank lending and co-operation will die almost overnight.
Just as the European banking sector proved hugely vulnerable to the U.S. sub prime crisis, so in this case would the U.S. banks be to a Eurozone financial crisis of even bigger proportions. The dominoes that could fall following a Greek default include a number of countries, lots of smaller banks, some major ones. The carnage could be horrendous virtually wiping out many peoples' savings across the whole of the Western world as banks collapse, housing values plummet , stock markets crumble etc.: The Great Depression 2.- but even worse this time.
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