Three months after passing a Euro stress test, Belgium has agreed to buy the local consumer-lending unit of Dexia for 4-B Euros (US$5.4-B), and will guarantee 60% of a so-called bank to set up for Dexia's troubled assets.
The rescue was inevitable as European sovereign debt worries caused the bank's short-term funding to vanish. Dexia's agreement to Nationalize its Belgian banking division and receive state guarantees show the way for other EuroZone governments to provide rescue packages to strengthen banking sectors.
Dexia is not an isolated problem. The question for investors in Europe is how politicians are going to handle this, and what they want to see is a coordinated and professional solution. That would be a good opportunity to restore calm. The markets cheered the move as investors realized that governments around the world will print as much money as necessary to handle the broken financial system.
The DJIA rose over 330 pts as every DJIA component rose on the day. At the open, Gold futures for Dec rose more than 30 to reach $1670, and Silver futures rose more than 1.00 to hit 32.
As the EuroZone shows progress towards stabilizing the Euro, the USD will take a hit. The Greenback fell more than 1.5% in Monday morning trading, which also gave precious metals a boost.
With countries around the World preparing rescue packages, stimulus programs, and devaluing currencies, some are turning to the long-term safe haven status of Gold.
Recently, the Dutch asked their central bank, DNB, about their Gold holdings. They asked, What is in your opinion on the function of the Gold stock?
The central bank replied, DNB's physical Gold holdings function as the ultimate reserve and anchor of trust in times of financial crisis. Further, Gold is being held for diversification reasons.
Individual investors concerned with the global debt crisis should consider precious metals for the same reason IMO.
Investors are asking, who is next to fall, and how high will it drive Gold and Silver? Stay tuned...
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.