LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Precious Metals Update Video: Market oversold, resistance in gold near $1,300
By: Ira Epstein

How Bull Tests The Risk-Averse
By: Rick Ackerman, Rick's Picks

Technical Scoop Update: E-Commentary Update for Easter Week
By: David Chapman

Silver Investment Demand Surged Higher Than Industry Forecast
By: Steve St. Angelo, SRSrocco Report

Asian Metals Market Update: April-18-2019
By: Chintan Karnani, Insignia Consultants

The Stock Marketís Great Fool Theory
By: Dave Kranzler

Gold Resource Corporation Reports Preliminary First Quarter Production of 6,538 Gold Ounces and 364,653 Silver Ounces Maintaining 2019 Oaxaca Mining Unit Annual Outlook, Appoints Independent Director
By: Gold Resource Corp.

Shades of 2013
By: Craig Hemke, TF Metals

The Bull(y) Rally - Something unnatural is going on
By: Adam Taggart

Precious Metals Update Video: Gold facing downside pressures
By: Ira Epstein

 
Search

GoldSeek Web

 
Euro Crisis: Major Implications For Investors

By: John Browne
Senior Market Strategist, Euro Pacific Capital, Inc.


-- Posted Monday, 19 November 2012 | | Disqus

The euro crisis has begun to feel like an everlasting steeplechase with high hedges and water obstacles blocking the path to economic resurgence on the Continent. Each time a hurdle has been cleared another problem emerges to potentially block the track. The latest developments involve ugly anti-austerity riots across the southern tier and open rifts emerging among the creditors, most notably between the International Monetary Fund and northern nations. Despite the difficulties, I believe that ultimately the horse will pass the finish line; the Continent has too many economic bright spots to simply slip into irrelevance. The big question should be whether the monetary jockey (the euro) will be thrown off the mount before that happens. Investors should prepare for both eventualities. But while the race is ongoing, the uncertainty over the euro currency is galvanizing the push for full political union of the Eurozone and providing effective camouflage for the weakness of the world's reserve currency, the U.S. dollar.

 

Future historians of the European Union likely will ponder how democratically elected governments of once proud empire nations willingly surrendered their sovereignty without full and open discussions. The answer lies in greed and fear. By 1950, Western Europe had been ravaged by two horrific Continental wars in 35 years and had been tossed about like a tennis ball in the Cold War match between the United States and the Soviet Union. In light of the situation, the impulse for greater European unity and cooperation was natural. 

 

The key founders of a united Europe were France and Germany. The French sought security by attaching themselves to Germany, while the Germans saw an opportunity for the political hegemony that the two wars could not deliver. But had the idea of European Union been originally presented as a means to empower Germany, few European peoples would have accepted it, least of all the British.

 

To that end, Jean Monet, one of the early architects of the Union, is alleged to have said, "Europe's nations should be guided towards the superstate without their people understanding what is happening. This can be accomplished by successive steps each designed as having an economic purpose, but which will inevitably and irreversibly lead to political union." He suggested patience in waiting for "opportunities" to progress the idea. As a Member of the UK Parliament, I witnessed such deception first hand.

 

Gradually, the innocent sounding European Coal and Steel Community (EC&SC) evolved into the European Common Market (ECM), European Economic Community (EEC), the European Community (EC) and now the European Union (EU), a budding superstate, dominated by Germany.

 

In perhaps one of the most foolhardy moves in recent decades, the euro currency was launched in 1999, long before the political or fiscal unification had taken hold in earnest. In retrospect, the creation of a currency in the absence of a unified state with coordinated fiscal policies seems doomed to failure. And failing it appears to be.

 

With each stumbling block, the invariable solution offered has been increased political integration and austerity. On November 7th, German Chancellor Angela Merkel flew to London apparently to 'persuade', if not compel, Prime Minister Cameron to tone down or delay his objections to increased EU budget expenditures. She felt so confident that, for the first time, she exposed the covert plans for the European Superstate.

 

According to the UK Telegraph, Merkel said, "Of course, the [unelected] European Commission will one day become a government, the [unelected] European Council a second chamber and the European Parliament [which currently has no effective power] will have more powers."

 

Clearly, a failing euro provides all the ingredients needed to knock down barriers to unity. As evidenced by massive public demonstrations in Portugal, Italy, Greece and Spain, the southern tier is desperate for rescue funds. In order to preserve bloated pensions and early retirement, many citizens would gladly accept lost sovereignty.

 

The failure of the euro also has provided cover for the severe debasement of the U.S. dollar. Prior to the crisis, the euro had established itself as the world's second currency. Its threatened failure has resulted in massive flights of capital into U.S. dollars. The result is that the colossal currency and debt crisis threatening the U.S. dollar and Treasury markets has been largely obscured. Today, most investors appear to be blissfully unaware that the United States faces debt problems that are worse than many countries in Europe.

 

However, if European politicians are successful in imposing the political unity needed to save the euro, money will flow out of the U.S. dollar. Alternatively, should the euro fail, other currencies such as a reconstituted Deutsche Mark could rise in its place. Either way, a resolution of the euro problem likely will signal a weaker U.S. dollar and higher interest rates.

 

Those investors who are overweight in U.S. Treasuries (or the government securities of other debtor nations) could likely suffer when either resolution is reached. Investors should prepare by acquiring assets that will stand and fall on their own merits. Being the least ugly contestant at a beauty pageant is not a strategy for long term success.

 

John Browne is a Senior Economic Consultant to Euro Pacific Capital. Opinions expressed are those of the writer, and may or may not reflect those held by Euro Pacific Capital, or its CEO, Peter Schiff.

Subscribe to Euro Pacific's Weekly Digest: Receive all commentaries by Peter Schiff, John Browne, and other Euro Pacific commentators delivered to your inbox every Monday! 

 

Order a copy of Peter Schiff's new book, The Real Crash: America's Coming Bankruptcy - How to Save Yourself and Your Country, and save yourself 35% off!


-- Posted Monday, 19 November 2012 | Digg This Article | Source: GoldSeek.com

comments powered by Disqus - John Browne Senior Market Strategist, Euro Pacific Capital, Inc.


John Browne is the Senior Market Strategist for Euro Pacific Capital, Inc. Working from the firmís Boca Raton Office, Mr. Brown is a distinguished former member of Britain's Parliament who served on the Treasury Select Committee, as Chairman of the Conservative Small Business Committee, and as a close associate of then-Prime Minister Margaret Thatcher. Among his many notable assignments, John served as a principal advisor to Mrs. Thatcher's government on issues related to the Soviet Union, and was the first to convince Thatcher of the growing stature of then Agriculture Minister Mikhail Gorbachev. As a partial result of Brown's advocacy, Thatcher famously pronounced that Gorbachev was a man the West "could do business with." A graduate of the Royal Military Academy Sandhurst, Britain's version of West Point and retired British army major, John served as a pilot, parachutist, and communications specialist in the elite Grenadiers of the Royal Guard.

In addition to careers in British politics and the military, John has a significant background, spanning some 37 years, in finance and business. After graduating from the Harvard Business School, John joined the New York firm of Morgan Stanley & Co as an investment banker. He has also worked with such firms as Barclays Bank and Citigroup. During his career he has served on the boards of numerous banks and international corporations, with a special interest in venture capital. He is a frequent guest on CNBC's Kudlow & Co. and the former editor of NewsMax Media's Financial Intelligence Report and Moneynews.com.




 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.