Ambrose Evans Pitcher writes about the international economy for the Telegraph. He wrote a fairly dismal piece recently about the plunge in gold prices and what it might mean. Read it here. Basically, the world financial system is not fixed and its problems are now rebounding big time into the real economies of all of the industrialized/industrializing countries.
A few bits:
You have to be careful reading too much into commodities, distorted by China.
The time-honoured cycle is a surge of investment that comes on stream at
once with a lag. America's shale drive has turned the gas market upside
down, diverting liquefied natural gas to Europe and Asia. Copper output in
Chile rose 7pc last year. The crash in the Baltic Dry Index for shipping
rates is partly a tale of too many ships.Yet excess supply does not explain the collapse in gold over the past week.
Cyprus may have been an incidental trigger. If the EU-IMF Troika is
determined to strong-arm the Cypriots into selling most of their pint-sized
holding of 14 tonnes, it may do the same to Portugal when the time comes,
and then you are talking about the world's 14th biggest holding of 382
tonnes.Bank of America says the gold crash since Friday has already discounted sales
of the entire Cypriot, Portuguese and Greek gold reserves combined. "As
we believe additional gold selling in the European periphery is highly
unlikely, we find it hard to fully justify the sell-off," it said.
He uses this term to describe the world:
The world is still in a contained depression.
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