The price of gold has dropped $80 an ounce in the past five days. Has gold lost its luster?
Some quick considerations:
- As reported last week, government central banks were buying gold as a hedge against inflation. Banks are not in business to lose money.
- Gold has rebounded (up $22.20 today) and it is up 2.48% over the past 30 days.
- No economic indicators have improved that would impact the price of gold in the past week.
Silver is a different matter. Its price was based on rampant speculation and it lost over 30% in the past five days before rebounding slightly today to $35.61. It has lost just under 10% of its value over the past 30 days.
As the following story details, gold is still the key to a strong currency even if the country is using a fiat currency. Will Germany end up with Portugal’s gold as part of their bailout?
David DeGerolamo
Top German Politicians Want Portugal To Dump Its Gold In Exchange For A Bailout
German politicians don’t want to give Portugal its bailout cash until it sells its own assets, according to the International Business Times.
Norbert Barthle, who is a member of Angela Merkel’s party and budget speaker, as well as his Social Democrat rival, Carsten Schneider, have both called for Portugal to think about selling its gold
Frank Schäffler, a member of the FDP party in coalition government, is more adamant, saying that Portugal should have to “sell their silverware” including gold, before they receive a bailout.
While the bailout package has been agreed to, economic ministers from the eurozone still need to approve the package in a vote on May 16.
As domestic pressure rises, German Chancellor Angela Merkel may force changes in the bailout package, or a higher interest rate on Portugal’s loans in order to appease her domestic constituencies.
