For precious metals, this week has been quite interesting, but mostly for all the wrong reasons. We have continued to keep our attention on everything that is happening in Greece and across Europe, but other economic issues have had the opportunity to butt their heads. Gold and silver spot values have been hit fairly hard by all these stories as safe-haven demand and demand in general for metals has sputtered to a halt.
Going forward, the focus of global investors will remain what is happening in Greece, but with Chinese stock indexes flirting with disaster, I would not be surprised to see the market’s attention to shift come this time next week.
Greece Debacle Not Quite Done Yet
When we headed into the weekend last week, the big story was with regard to Greece and whether or not their citizens would vote no or yes on a referendum tied to additional bailout funds. By Monday, the word was clear and it was reported that more than 60% of Greek citizens voted in favor of Athens rejecting austerity measures in exchange for more money. While the vote’s outcome was celebrated by citizens everywhere, the real challenges have only just begun.
As it stands, Greek banks are on the verge of collapse, and with ATMs running dry, Greeks are wondering what their financial future holds. Talks are still taking place this week to see if some sort of deal can be reached, but with austerity measures off the table, I am not so sure European creditors are willing to play ball with Greece. As for what all this means for the wider global marketplace, it is tough to say. It seems as though most investors have already gotten their fill of what is going on in Greece and are not paying it much mind, but that much seems to change on a daily basis.
Chinese Stocks in Free-Fall
Another story that has been called into focus this week is the fact that Chinese stocks have taken a nosedive. It has been no secret that China has been dealing with plenty of economic problems over the course of the past year or so, but recently these problems have been thrust front and center.
This week saw Chinese stocks fall at record rates and that much has caused stress across the global marketplace. Basically, because so many other economies are so reliant upon China’s any stress emanating from China’s stock market is sure to boil over to the United States, South Korea, and any other country with extremely close business ties to the Asian giant.
The Chinese government is actively trying to prevent stocks from falling any further, but so far their efforts have been in vain. For gold and silver, this situation may seem like one that would prompt safe-haven demand, but with China being one of the world’s leading purchasers of gold and silver, this news has not really come to the aid of metals. Some safe-haven buying was seen on Wednesday, but by day’s end metals were back to trading right around where they opened.
As we look ahead to the week to come, it is my belief that we will continue focusing on the same two situations. First, it will be interesting to see if any sort of lasting resolution comes from Greece, or if the country will continue to spiral downward economically. The situation in China seems to be just getting started, so I am truly interested to see what direction things will head in by the time markets open for trading next Monday.