Global economic uncertainty may prompt return to safe haven gold buying.
January 2015 has already been remarkable for the number of Black Swan (unanticipated) events which have hit the markets in such a short space of time. Some of these have been totally unheralded like the Swiss National Bank’s decision to unpeg the Swiss Franc from the Euro and the Charlie Hebdo massacre – which really did take the markets by surprise – while others may, in hindsight have been a little more predictable.
These include the escalation of fighting in Eastern Ukraine as both sides appear to have used a recent ceasefire to boost their military arsenals and prepare for more fighting; the death yesterday of King Abdullah of Saudi Arabia – perhaps predictable in that he was 90 years old and in poor health – but nonetheless promoting new uncertainties in what is a particularly volatile part of the world; the apparent growth in strength of Boko Haram in West Africa, which has the potential perhaps to spread to major gold producing areas if the rebel group is unable to be held back.
And all this within a three week period! Who knows what else is in store for us in the remaining 49 weeks that lie ahead?
There are some very predictable potentially destabilising factors coming up. The latest opinion polls for Greek elections this weekend suggest the country is poised to put the left wing anti-austerity party, Syriza, into power, possibly with an overall majority sufficient to govern without a coalition partner.
Pre-election rhetoric suggests that Syriza, if in power on its own, would renege on Greek debt commitments and drop many of the austerity measures imposed on the nation by the IMF and Eurozone. There are fears that this could lead to Greece’s exit from the Eurozone throwing the single currency system into disarray and a debt default could have a huge adverse impact on a number of major European banks culminating in a financial meltdown which could outdo that following the Lehman collapse, which was seen as leading to the 2008 global financial crisis.
A result of the Charlie Hebdo massacre in Paris threatens to unleash an anti-Muslim backlash throughout Europe, or stimulate copycat killings by other fanatical fundamentalists which all creates a sense of worry throughout much of Europe and possibly in the U.S. itself.
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