Los Angeles, CA – Precious metals took a sharp drop on Monday as news of the European debt crisis appears to be taking a turn for the worse. Gold moved down beneath $1700 an ounce as investor fear led to liquidation of everything except government bonds and the need for traders to raise cash to cover loses of lower equity pieces around the world.
Spain’s People’s party swept the current ruling socialists out of power after an 8 year term; and while People’s Party leader Mariano Rajoy planned for the country to avoid a bailout situation, he also pledged for slashing the country’s budget deficit without giving any details on how he will do it. For the past 3 months, many of Europe’s chief powers have held summits to discuss plans to solve Europe’s debt crisis without any real concrete details on how to fix the economic disaster.
“It’s a systemic problem that continues to weight on the market” said Elwin de Groot, a Senior Market Economists at Rabobank Nederland. “Markets want to see action and not words”. Spain’s Socialists became the 5th government to be hit by the debt crisis this year. In addition, Moody’s investor service today announced that it said France’s AAA credit rating is at risk. This news coupled with Germany’s growth report projected at a near standstill for next year has many investors worried about the future of their wealth and the global economy. “The world economic situation is extremely severe”, said Chinese vice Premier Wang Qishan; “The global economic recession triggered by the international financial crisis will be long-term”.
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