Greetings!, The pain in Spain falls mainly on it's credit rating, which is to blame. As the sovereign debt crisis in the European Union accelerates, today we witnessed another nation of the E.U. have its credit rating lowered. This action put substantial pressure on the euro, which traded close to a two-year low, spurring the U.S. dollar to continue its rally. Eagan-Jones downgraded Spain's credit rating and one of Spain's largest banks, Bankia, was in such immediate peril that it was given a significant infusion of cash over the weekend in order to keep it solvent. These new developments come on the heels of heated concerns as to whether Greece will remain part of the E.U., or exit the union, dumping its financial obligations and the euro in one fell swoop. There was an abundance of safe haven buying, but the focus was in U.S. dollar backed investments and not traditional safe haven vehicles such as the precious metals. The dollar is currently trading at a 21-month high, and continues to strengthen as uncertainty in the EU grows. Reports surfaced last night that China may in fact introduce new monetary stimulus measures in order to boost their economy. However, it needs to be noted that the Chinese economy has been running in overdrive and even in its current slowdown still maintains a vigorous pace. Any monetary stimulus measures, whether implemented by the United States, the E.U., or China, could very well have a strong bullish effect on the precious metals markets. As always, wishing you good trading Executive Producer |
