Tuesday, May 11, 2010

One Size Doesn't Fit All... and Gold

Europe is in a tough situation as all European economies are not in the same situation with regards to debt levels (i.e. solvency risk) or shorter term economic strength.



With all this liquidity being pumped into the system, Europeans must now also deal with potential overheating in those parts of Europe in less need of stimulus. With all this uncertainty over the Euro, it is not a surprise that gold has spiked to a record high in Euros (the chart below is an estimate of this figure using GLD [gold ETF] and FXE [Euro ETF] as approximations - multiply by 100 to get an approximation of Gold in Euros).



Source: Eurostat