Gold Surges As Greece Crashes – Eurozone Debt Crisis Part II Cometh
Gold jumped 2.3 percent to a six-week high yesterday as sharp falls on stock markets globally led to renewed demand for gold as a haven.
Monday night and Tuesday saw renewed market turmoil across the world. Leading shares suffered their biggest daily fall since the middle of October, hit by renewed fears about the global economy and uncertainty in Greece following the announcement of snap presidential elections.
The FTSE 100 finished 142.68 points or 2.14% lower at 6529.47 yesterday as a combination of worries unsettled investors. Greece’s stock exchange crashed as the banking sector dragged the rest of the stock market down a staggering 13 percent, it’s most dramatic single-day decline ever. Greece is failing to exit its bailout amid uncertainty over its political future after the election news.
Meanwhile Chinese shares fell sharply in the wake of Monday’s disappointing trade data, showing a drop in imports, and a clampdown on its corporate bond market, while Japan was revealed to be deeper in recession than expected and the Nikkei was down 2.25 percent this morning.
The Shanghai Composite and Abu Dhabi’s ADX saw their sharpest falls since 2009. Wall Street joined in the global declines and stock markets lost $100 billion on Monday.
The already jittery market apparently balked at the shock announcement of Greek Prime Minister, Antonis Samaris, to hold a snap presidential election. If the government candidate loses it would pave the way for a general election in which the socialist Syriza party would be strong contenders.
Syriza say that they will renegotiate with the Troika and increase public spending which may put bondholders at risk. Britain’s Independent quotes Charles Robertson from Renaissance Capital warning that “a possible Syrizas election victory may force the Eurozone to choose between a fiscal union or the first euro exit.”
Greek Gold Stater Coin (323-281 B.C.)
Greece still has very high unemployment of around 25 percent and GDP has been wallowing since 2009 with a 1 percent rise in the cards for this year off a base that is 30 percent below 2009 levels.