Auguries — Waiting For The Other Shoe To Drop

October 20, 2011

By Kevin Michael Grace

Precious metals had a bad week, with (at press time) gold down $56.20 (-3.4%) to $1,612.90 and silver down $1.20 (-3.8%) to $30.56. The decline was attributed to “escalating worries about Europe’s inability to resolve its debt problems.” The latest on that is not reassuring. “Standard & Poor’s is to warn that a double-dip recession in Europe would imperil France’s AAA rating and set off a string of downgrades across Southern Europe, undermining the EU’s debt crisis strategy,” Ambrose Evans-Pritchard reports.

It’s unclear why fears of an EU collapse are bad for gold, but that’s today’s “narrative.” Perhaps next week we’ll have a different narrative, and this process will be repeated until the Eurozone’s fate is revealed. Worldwide, markets are now characterized by a generalized anxiety that is not assuaged by continuous assurances that our best and brightest will somehow find a way out of our mess.

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