Monday, July 18, 2011 11:20 am – Markets, Euro Banks Stress Test

Another down day as the markets react to the ongoing debt crisis in Europe and the debt ceiling crisis in the U.S. In both cases, no news is bad news as far as the market is concerned because the clock is ticking.

Greece is going to default in some way; there really is no way out of it. It’s just a matter of when and more importantly, how they structure it. Anything else you hear is just smoke.

The European bank stress test was just like the U.S. version in 2009 – purely a political event to reassure markets and voters. Like the U.S. version it was too lenient and is not terribly helpful except that it did illustrate how much debt the European banks hold in non-government debt in the problem countries and it was more than expected.

Gold and silver are higher and will continue higher while these crises drag on. As soon as we get an agreement on the U.S. debt ceiling gold will see profit-taking.

Leave a Reply

Your email address will not be published. Required fields are marked *