Gold Reacts With "Big Yawn" to ECB Announcement
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Earlier today the ECB Caved in on "Temporary" Defaults and Collateral.
It is important to note that the ECB did not "allow" a default, rather the bond market forced the ECB to accept default. The stock market reacted as if the announcement meant something, but gold gave a big yawn.
Gold Daily Chart
Gold Weekly Chart
Of course there are so many problems it is hard to know what gold is or is not reacting to.
Partial List of Problems
- Sovereign debt default crisis in Eurozone PIIGS: Portugal, Ireland, Italy, Greece, and Spain.
- US debt ceiling concerns
- US fiscal deficit concerns
- US total debt concerns
- Reckless, unsustainable credit growth in China
- Rampant inflation in Brazil, Russia, India, and China, the BRIC countries.
- Yuan peg to the US dollar
- Debt and deficit concerns in the UK
- Japan interest rate and total debt concerns
- Massive global trade imbalances
I could easily add another 10 items related to global housing bubbles, demographics, unfunded future liabilities, state pension plans etc.
The idea this announcement solved anything is complete silliness and gold's reaction with a big yawn was well deserved.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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