Could Spain Be Next?

[Malcolm Robinson]

Even hoarding gold isn't too sensible financial advice. It's already way way above any sustainable historic level; production is leaping as the price encourages more exploration/mining and bringing back into production formerly uneconomic mines. Plus there aren't too many real industrial uses for the stuff these days. Classic signs of a bubble market set to catch the financially naive. Far better to hoard something they don't make any more - like prime agricultural land.

I take your point GGG but within a month you would have been looking at a 10%+ return even buying at what were historic levels. It is a hit and run jobbie but I think it has more legs.............considering the EU crisis, USA crisis and Chinese crisis!

[Merlin]

Heard on the news this morning that America will be up to it's legal limit for borrowing on Tuesday. So, me being the thicko on such matters, does this mean that America will be appearing at Bedlington Magistates court for illegally borrowing money after Tuesday Or is it more serious than that and warrant Newcastle Crown Court?

[Malcolm Robinson]

You are right to point it out Merlin, the Yanks could be the straw that breaks the world financial camel's back, but they won't, a deal will be done I have no doubt, even allowing for all the hyperbole and flustering being done by everyone over there including the President.

Theoretically the government runs out of money and stops working. Unbelievable, it's happened before to them! Public sector workers just didn't get paid.

Several States are technically bankrupt anyway and considering Chapter 7, 9, 11, 13 Bankruptcy. Although by their laws that might not be allowed, Chapter 8 is being touted as a possible route for them to what in reality means 'default on loans'. It's a bit like NCC saying they cannot manage their budget, in that case our central government sends in a hit squad who take charge and sets what it thinks is needed.

Think it might need a bit more 'specialised' help, other than that available at Bedlington Magistrates for this one!

[Malcolm Robinson]

I think there is another side to this one which has to be considered, the Feds willingness to implement yet more QE and also their determination to allow for the dollar's continuing exchange rate weakness. They are far more potentially dangerous than agreeing to lift the debt ceiling at the last minute.

[Malcolm Robinson]

Back to Europe..........

''Moody's Investors Service has today placed Spain's Aa2 government bond ratings on review for possible downgrade.''

So much for the Europrats and their bailout packages...........

[Malcolm Robinson]

Italian banks looks to be facing meltdown if yesterdays runs are continued.

Spanish bonds have gone from 5% to over 6% in a month.

If this is a rescue package its akin to throwing a drowning man a cup of water.

[Malcolm Robinson]

Even hoarding gold isn't too sensible financial advice. It's already way way above any sustainable historic level; production is leaping as the price encourages more exploration/mining and bringing back into production formerly uneconomic mines. Plus there aren't too many real industrial uses for the stuff these days. Classic signs of a bubble market set to catch the financially naive. Far better to hoard something they don't make any more - like prime agricultural land.

Well GGG you would be looking at about a near 20% return on a gold investment now even buying at the price when we posted! Might well be time to realise gains!

At the moment I would be taking put options in BoA in direct opposition to what the Sage of Omaha is doing. If it goes the way I think we might well see him in the market again next week!