Greek Rush for Safety Sends Gold to $1700

by | May 27, 2010 | Precious Metals | 12 comments

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    When it hits the fan and your country’s wasteful spending and extreme debt finally come home to roost, this is what happens:

    And there are those who wonder how Sprott’s PHYS could have traded at “ludicrous” NAV premium of over 20%. Coinupdate.com reports that prices at which the Greek Central Bank is selling one ounce gold equivalents are as high as $1,700 (40% over spot), and prices on the black markets are even higher. The punchline, as Athens slowly returns to a forced gold standard: ” A popular spot for street vendors to sell their coins is near the Athens Stock Exchange.  There the traders wait for citizens to bring payments received from unloading their paper assets like stocks and bonds.” That’s good – downtown Manhattan close to the NYSE has some free space for gold vendors to set up shop as well, they just need to push some of the frontrunning/collocation boxes off to the side. And in other rhetorical ruminations, is it safe to say that the last days of the fiat experiment are among us now that people themselves are bypassing the government and enforcing their own gold standard?

    [source: Zero Hedge]

    Those Greeks that have money are willing to pay a 40% price premium just to make sure they have something left if their government collapses due to debt crisis. While this may be regarded as panic buying because obvisouly the price of gold outside of Greece has stayed in the $1000 – $1200 price range, it is clear that when a country’s private sector loses confidence in its government, there is only one feasible place to go for safety because it’s liquid, readily recognizable, and globally accepted as a trade instrument – precious metals.

    Learn more about the ins, outs, why, what and how of precious metals from the most recent Schaef Report Special In Depth Precious Metals Edition.

    Also read Collapsing Public Confidence and Gold to learn why gold is not just a hedge against inflation, but a hedge against out-of-control governments.

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      12 Comments

      1. sanityjones

        It would seem that a priority check is in order. Should their government collapse due to a debt crisis, these same people will be pawning their gold for food on the table. The herd mentality will be the death of them/us all. Remember………financial diversity is both wise and prudent the best of times; more so during times such as this and what is to come. These gold vendors stand to make a killing on both ends. Please try to stay focused people, mistakes made at this point may very likely be permanent.

      2. Paul Revere

        Speaking of gold, has anyone heard about the pulled National Enquirer write up about Barack Obama’s affair with Vera Baker?

        Supposedly the National Enquirer is owned by a New York banker which is probably the reason Obama’s Financial reform bill is so lame.   He does not want the article circulated and has agreed to water the bill down to give the bankers terms that favor them, not the citizens?

        http://www.mediaite.com/online/the-national-enquirer-obama-sex-scandal-the-media-and-mediate/

      3. kingkang

        Wait a minute…who said PHYS is 40% over NAV premium.  Does that mean PHYS is over-valued?  I’m assuming PHYS is safer than most gold ETF’s.  Someone let me know…

      4. Patrick

        Yes, PHYS is well over NAV… as with EVERYTHING… buyer beware, do your own research before buying anything.

      5. Henry

        The article says the gold coins being traded are .2354 of an ounce. The coins have sold for AS MUCH AS $409 per coin. I would like to know HOW MANY sold for this price.
        I think the article is just more fear mongering for those who have something to sell.
        If you buy gold because YOU have done your own research leading to what you feel are logical conclusions, then buy it. Don’t be suckered into an emotional buying spree you might regret later.

      6. kingkang

        No I agree which has led me to PHYS in the first place along with CEF.  I think there’s going to be a short-term correction.  I’m waiting for about 1050 or so before I go “all in.”  I highly doube that it’ll break the resistance of 1000.  In some ways, gold is acting like a bubble b/c everyone’ s talking about it and that’s the worst way to invest.  I guess that’s why I like silver much much better but there are no darn good ETF’s for that one.  If you guys know of any, please let me know b/c I’ve been searching for years.

      7. manos

        Henry,

        The price which the central bank sells is being announced every day to the official site: http://www.bankofgreece.gr/Pages/el/Markets/LIRA/default.aspx
        For example the 27 of May, the selling price is 269,30 euros whereas the bying price is 224,88 euros.
        The difference between the two prices is the bank’s profit.
        About the 409 dollars per coin (or 335 euros), i presume that it refers to some extreme cases, being sold in the black market.
        The bank issues a legal invoice which refers to the official site, and prohibits from any kind of speculation.
        In my opinion, gold is going to preserve a desperate person or family for just a little longer. No to much though, since speculators would ask anything for a piece of bread or some cans.
        Again the main thing is to be able to produce your own food and water.

        manos

      8. Paul Revere

        If you screw around long enough there will be no physical gold or silver to buy.  

        If you buy ETF’s you are already screwed as I can assure you they will not deliver as this crisis deepens.  ETF’s are a total scam dependent on their contracted (third party) bullion banks to hold the physical metal which they themselves have allocated their limited holdings to multiple parties.    The demand totally outstrips available supply.    

        In other words the amount of ETF contracts outstanding are totally out of proportion to what the bullion banks physically hold.

        As far as I’m concerned your dog meat if you buy ETF’s.   If you want to protect your loved ones buy PHYSICAL!          

      9. Henry

        Manos
        I agree with you. My own opinion is gold and silver should be purchased only in bullion, and in the case of gold, in the lesser denominated bullion coins, i.e.  1/2, 1/4, and 1/10th ozs.

      10. Prairie Dog

        My guess is that there’s probably some stiff VAT tax of 15-20%. Then add a premium of 10-15% and that what’s left as “real” premium over spot. I don’t know all the ins and out of buying gold in Europe but people I’ve spoken to from Europe told me they always have to pay 15-20% VAT on all bullion purchases right off the top.

      11. kingkang

        Nice link “snafubar.”  However, the reason for the drop in price on PHYS that day was BECAUSE of the additional units supplied.  Supply & demand.  But I still think PHYS is a good instrument.  Marc Faber even says “you can’t go wrong investing with Eric Sprott,” which is on the record. 

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      1. Memorial Day Weekend Reading | 20s Money - [...] Greek panic pushes gold prices to $1700 (SHTF) [...]
      2. The United States is Collapsing - [...] than any time in recent history, as we can see from what happened in Greece a few months ago…

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