The global investment market is experiencing a sense of déjà vu thanks to concern over the American credit downgrade, the debt crisis in Europe and slow economic growth in both China and America. With the exception of the credit downgrade, this was pretty much the economic atmosphere during the crash of 2008. Realization of a pending recession caused markets to plummet recently. That said, gold hit a high of $1700. Silver was another precious metal that realized gains as well.
Silver managed to reach $39.85 per ounce and ended the day at $39.13. Silver gained 1.85 percent and gold gained 3.23 percent. This is indicative of the real possibility that industrial demand will reduce and the prices of copper and crude oil will reduce as well.
Investors are aware that a storm is inevitable and they are now looking towards silver and gold as a hedge against the storm. Gold investors are of the firm belief that gold will ultimately become the world’s currency. Investors who like to play it safely are looking towards silver as a safe haven as silver is much cheaper than gold. There are also some, like us here at the Silver Bullion website, who are of the firm believe that silver is money and will be used as money again.
The European Union (EU) is in a mad rush to sort out their own fiscal matters and America is involved in politicking which is actually detracting from its ability to get its financial house in order. Slowly but surely, Europe’s financial woes are spreading to areas such as Spain and Italy. While the European Central Bank offered help by promising to purchase Italian and Spanish government bonds this move has done very little to allay investors’ fears. Most investors are of the belief that American and European governments are in no position to sort out this mess, especially considering that in Europe they expect Germany to back the bulk of the ridiculous high bailouts which are necessary to keep the EURO afloat. The best advice we can give to the Germans is to withdraw from the European Union (EU) and to switch back to a gold and silver backed Deutsche Mark (DM); otherwise the parasites and their allies will surely suck the life blood out of Germany AGAIN. Why should the Germans suffer because of ill-disciplined fools and parasites???
Sadly, these investors are probably on the money with this sentiment. Investors are less keen to expose themselves to more investment in Western countries. Governments are unable to address growing unemployment and prevent the demise of prosperity. It is believed that America has arrived at a breaking point.
China has accused America of being addicted to debt and having an ineffective political process. This was displayed in their newspapers shortly after Standard and Poor adjusted America’s credit rating. Demands were made that the dollar be replaced as a global reserve currency and that welfare and military spending be curbed dramatically.
China has a vested interest in American finances as they hold the most amount of American debt to the tune of $1.2 trillion. China therefore has every right to demand that America take steps to sort out their debt issues and promise the safety of China’s dollar assets. Some pundits fear that this recession will have far greater impact than the one that most of the world is still recovering from. Back in 2008 decisive action was taken, however today things are not the same. For starters, new fiscal stimulus will not be present. It is not envisaged that America will become involved in trying to stabilize markets. It is very possible that this time round, financial corporations will be left to crash and burn.