August gold surged 54 dollars to take gold above 1600 again! August gold closed at 1604.20 — after failing to break and hold below 1500.
Merkel’s Compromise Could Save the Euro (Bloomberg.com)
June 29 (Bloomberg) — German Chancellor Angela Merkel and Italian Prime Minister Mario Monti comment on last night’s European Union summit in Brussels:
A minor miracle has occurred in Brussels: Germany has signaled that it may be willing to do what it takes to save the euro.
Now the question is whether Europe’s leaders can show enough money to back their words.
In negotiations that lasted through the night, German Chancellor Angela Merkel agreed to allow Europe’s permanent bailout fund — the European Stability Mechanism — to provide capital directly to troubled banks anywhere in the euro area.
If the deal sticks, Germany and the other governments of the currency union will accept joint liability for rescuing one another’s banks — an option that, on the eve of the meeting, Merkel had vowed not to consider. In return, as part of a broader banking union, governments will cede to European authorities, probably including the European Central Bank, the power to oversee, punish and dismantle banks. The agreement also eases austerity measures and allows for direct bond purchases to reduce the borrowing costs of struggling governments, including Italy and Spain.
Continue reading on Bloomberg.com
The agreement will mean that the EU Central Bank will do a lot more printing — a fact that was not lost on gold today.
On Friday, I received an email from one of our readers and he asked me “when you refer to parabolic how high can it go?” My response was parabolic doesn’t refer to a number; it refers to how fast it gets there. The rise is straight up, but the law of gravity applies to the markets too and nothing goes up forever.
In the context of gold, if you want to see what parabolic looks like, check out the following two charts from 1979 and 1980. Needless to say, we haven’t gone parabolic yet, in this 11-year old bull market – but it is coming!