Quick Hitter: The financial markets steadied themselves today after the initial “shock” of yesterday’s European elections. The EUROPEAN DEBT MARKETS showed resolve as both the BTPs and OAT futures performed better than the BUNDS and the EURO rallied back to almost unchanged as the market awaits the discussions between Merkel and Hollande, as well as further word about attempts to create a working government in Greece. At the end of the day, a crisis was averted but as all our readers know Spain, Portugal, Ireland and Italy are all still on the boil. So, while the heat was turned down NOTHING HAS REALLY CHANGED … so it goes.
The financial media was buzzing about the sage of Omaha’s opinion on the GOLD market. Yes, we all know that GOLD effectively has no yield and is a STORE OF VALUE AND HAVEN ASSET during times of economic malfeasance on the part of politicians and central bankers. The amazing thing in today’s world is that people like Buffett and Munger have not found a way to utilize the DORMANT ASSET AND PUT IT TO WORK.
In a world devoid of high quality bonds and the explosion of derivatives, the use of the world’s GOLD RESERVES AS SECURITY FOR SOVEREIGN BONDS COULD RAISE MONEY FROM AN ASSET WITH NO PRESENT UTILITY–IF GOVERNMENTS WOULD LEVER UP THE GOLD BY MAKING THE AMOUNT OF GOLD TO FACE VALUE SAY 5 TO 1.
From Bloomberg: These are the official GOLD HOLDINGS ACCORDING TO THE WORLD GOLD COUNCIL (in metric tons):
United States: 8,133.46
Saudi Arabia: 322.90