Market Gains On Eurozone Announcement?

By: Ian Campbell | Tue, Jul 3, 2012
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Why Read: Because the Friday, June 29:

to the Eurozone 'agreement' on bank funding and austerity measures vividly marks once again the 'trading nature' and volatility of those markets.

Featured Articles: See linked articles at the end of this commentary.

You will have been bombarded with media reports on the agreement reached in the early hours of June 29. Accordingly it is 'enough said' to simply state that the agreement then reached is subject to 'certain conditions', including:

Commentary: On the face of things, this agreement will not serve to solve any problems in the Eurozone, it simply will result in more quantitative easing. Hence the bump Friday in the both the financial markets, and a rather remarkable concurrent 'bump upward' in the gold price by about U.S.$40.

The fact that the gold price went up is not in itself 'remarkable'. One would expect that in where agreed government measures can do little but result in the economies impacted simply getting 'further into the glue'. What is remarkable that both the financial markets and the gold price moved upward in tandem on that news. This leads to a question of whether gold is trading more like a 'financial market instrument' than it is like a 'safe haven' long-term hold.

Further comments:

reside on the same end of the economic teeter-totter. It is becoming increasingly difficult to believe there is a teeter-totter with an end 'that big'; and,

Related Articles

The Half-Life Of The New Euro Bailout Will Be Measured In Weeks
Business Insider, Bruce Krasting, July 1, 2012
Reading time 4 minutes

EU deal for Spain, Italy buoys markets but details sketchy
Reuters, Ilona Wissenback and Luke Baker, June 29, 2012
Reading time 4 minutes

Markets rally after defeat for Merkel
The Telegraph, Louise Armitstead, June 29, 2012
Reading time 3 minutes

TSX racks up triple-digit gains as investors cheer eurozone deal
The Financial Post, from The Canadian Press, June 29, 2012
Reading time 3 minutes

Oil posts fourth biggest daily gain on record
Reuters, David Sheppard, June 29, 2012
Reading time 3 minutes

Also read

Europe and Yogi Berra
Financial Sense Blog, David Kotok, July 2, 2012
Reading time 4 minutes

 


 

Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
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Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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