Some of the Euro zone is having success with their bond sales however it won’t erase forty years of social welfare with little tax collection during those times resulting in deficits that are beyond control. If this continues to drag on deep into the spring without some deep intervention most likely with the IMF involved we could see another drop similar to last summer 2000 point decline. All assets are being sold now for cash positions including profit taking on gold to cover other losses.
If the markets are to be salvaged during this supposed market upswing, we have to get the worst behind us regarding Europe, as market recoveries by some countries will be stunted. For example Canada has increased trading with Europe in recent years, however as the Euro devalues and Europeans tighten their belts less trade will occur. It is also propping up U.S. treasuries as an imagined safe haven in turn keeping gold in check (for now).
China also exports to Europe, which is one of China’s biggest customers. This may be an impetus for China to reverse their thoughts on IMF intervention with increased contributions from China. China is trying to cool inflation so right now this works for them for now. We will see how much pain it will take to watch European imports fall before China decides it is enough. The U.S. recovery will also stall as world economies stall. Either way gold’s future is being secured every day. We will get to $2000 gold one day and stay there, as the up cycle will continue.