Lear Capital: European Trouble in 2011 Could Cause Nations and Investors to Take Another Look ...

By @ibtimes on

MeWe've all heard about Greece and Portugal. But Spain? Ireland? 

Italy?

Could these economic powerhouses now face trouble? Is Europe itself facing trouble?

According to journalist Ambrose Evans Pritchard, someone not known to pull punches, Spain's former head, Felipe Gonzalez, warned that unless the European Central Bank (ECB) steps in, members of the European Monetary Union will lurch from one emergency to the next until it blows up.

Alluding to Portugal and Spain, he [Gonzalez] said a third country will need a rescue as soon as ‘January or February', and fourth soon after, at which point it will ‘contaminate the whole of Europe and get out of hand.

Willem Buiter, chief economist at Citigroup, said Greece, Ireland and Portugal are all insolvent already, and Spain is close behind.

Rush Limbaugh has talked about the US and the Fed helping with this European bailout.

The question, of course, is what happens when the exhausted rescuers needs rescuing? Both the ECB and the Fed can't — despite assurances to the contrary —magically make money appear. Bankers aren't magicians. And every dollar/euro these institutions do manage to produce, either as printed money or digits, weakens the existing money supply. Yes, bailouts can proceed piecemeal as they have but, at the end of this dismal chain, will the surge of bailout money still be worth anything?

All of which brings us to gold.

Today, it's prudent to think it terms of financial self-defense. With the ominous moaning and groaning from European countries (not corporations, mind you), with former heads of state issuing dire warnings of their own, it may be smart to buy a few gold coins as part of your what-if fund.

Doesn't matter that you'd essentially be insuring yourself against something that hasn't happened in modern days. Insurance, of any type, basically amounts to your attempt to prepare for the unlikely and the unthinkable, doesn't it? The gold coins you own would represent a beautiful, debt-free, self-contained monetary system...something that doesn't take something else to stay valuable (unlike stocks or currency).

Join the Discussion