Lots of action and profit opportunities!

Hi,

I would welcome your comments on “if the below was to happen” how it would likely effect gold prices?

Could a “Redemption Fund” save Europe?
In a glass conference room somewhere in Brussels, soon, there’s going to be a fight to decide the fate of the world economy.
The most important people in that room will be Angela Merkel and the newly elected Francois Hollande.
Hollande has a mandate from the French people. He wants rich European countries to jointly guarantee the debt of the struggling periphery (via eurobonds). Hollande also has the backing of the OECD, the IMF and many top European politicians. They worry that this could be the last chance to save the euro, and with it the world economy.
Mario Monti, the technocrat prime minister of Italy, is also in his corner. So is Mariano Rajoy, the Spanish PM. Greece, Ireland and Portugal would jump at the chance. Even David Cameron has urged the 17 members to set aside their differences and agree to Eurobonds.
Spain, in particular, desperately needs such a mechanism. It is close to spending more than €100bn rescuing its banks – having to pump €19bn into Bankia alone last week – and could be soon shunned by commercial lenders.
But Merkel has been very reluctant to give anything away. And you can understand why. If you had some relatives that were spending wildly and had run up a €2 trillion bill, would you be a guarantor on their next credit card application?
Of course you wouldn’t. Borrowing costs for Germany would soar. In fact, it is estimated that Germany could face an extra €50bn a year in interest. So over two decades, that could add to €1 trillion.
But there is a new development here that could change the story. I’m talking about a refreshing solution to this impasse – one that is being championed from some enlightened parties in the Bundestag…
Gold could save Europe
Yes it seems that Europe’s savour could come from an unexpected source… gold.
You see despite all the huffing and puffing in Brussels over Eurobonds, there’s a compromise solution; one that Germany’s opposition parties have forced Merkel to reconsider.
It involves creating a new €2.3 trillion “redemption fund” – one that is backed by sovereign holdings of gold and foreign currency.
The idea is for the 17 member states to pool liabilities on debts over 60% of GDP. All the parties would be jointly and severally liable – providing a massive safety net in the event that Spain and Italy needed bailing-out too.
The fund would be limited to 25 years, with the quid pro quo that states using the facility would commit to economic reforms, such as privatisations, free markets and austerity. This would permit indebted countries to offset some of their sky-high borrowing costs against Germany’s lower rates.
I think this could bridge the gap between Berlin and Paris.
Indeed Chancellor Angela Merkel indicated last week that such a solution might work. Italian Prime Minister Mario Monti added that he can help bring Germany round to acting in Europe’s “common good… a united Europe is in Germany’s interest. We’ll have euro bonds if the euro area, and therefore Germany, will want them.”
Merkel’s government agreed to discuss the concept with opposition parties on 13th June – 4 days before the Greek elections. This could be a major positive breakthrough.
Nonetheless whatever final decisions are taken, we need to be prepared for volatility.

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