It has been seven years since the Greek debt crisis began, and it could be ongoing. Yesterday (20th February 2017), the European finance ministers, known as the Eurogroup, met in Brussels to address the continuing situation.
It has been reported that a bailout fund of $7.4 billion dollars could be released to Greece, to assist with the financial debt crisis. However, unless Europe can come to an agreement to forgo part of Greek’s debts, then this money may not be released to Greece.
As always, the uncertainty that the Greek crisis is causing, could increase the attractiveness of bullion, as a means of combatting any potential issues that the Euro and other currencies may face following the meeting.
Greece deliberating leaving the European Union has reportedly been on the cards for a while. If they do this, it has been argued that they will be able to raise their employment rate more quickly, as well as wipe out part of, if not all of their debts. However, the fear of Greece leaving Europe involves the potential of the Greek’s printing more money. If Greece does this, then a situation like the depression of the 1930’s following the First World War could take place. It would be dangerous for any country to live off a ‘false economy’, but equally, remaining in large amounts of debt is also a danger. As such, Greece is arguably in limbo.
Germany, who have apparently footed more of the bill towards Greece’s debts than any other EU country, are also against Greece leaving the EU, as they want to ensure that Greece pay back at least some of what Germany have given to them. However, Germany's view for Greece to stay is not shared by all European countries. Evidently, European countries may be torn on this matter, and with the European elections looming in April of this year, the added burden of the Greece crisis is being felt.
It appears that the European elections and Britain’s vote to leave the European Union last June have only added pressure onto an already critical situation. Ian Lesser, the Brussel’s based executive director of the German Marshall Fund’s Transatlantic Centre has labelled Athens as a ‘danger zone’. It seems likely, given the circumstances, that safe-haven assets could be on the rise.
Gold on Hold?
Yet, this morning (21st February 2017) during Asian Morning Trading Hours, prices for gold have edged lower and have been quoted at $1,230.65 per ounce, which is down approximately 0.5% on the previous days close.
Arguably, this figure is due to the interest rates in the US as discussed in yesterday’s blog, and the same question remains, could the continuous political upheaval in Europe, with a focus on the Greek crisis alter the demand and price for bullion?
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.