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Gold The "Ultimate Insurance Policy" Due To "Grave Concerns About Euro" – Greenspan

Executive & Research Director @ GoldCore
February 20, 2017

"The eurozone isn't working ..." warns Greenspan

"I view gold as the primary global currency" said Greenspan

"Significant increases in inflation will ultimately increase the price of gold"

"Investment in gold now is insurance..."

Source: Getty

Alan Greenspan, the former head of the Federal Reserve has warned that the euro may collapse, saying that he has "grave concerns" about its future.

The imbalances in the economic strength of euro area countries make the continued function of the single currency area a primary concern, said former US Federal Reserve chairman Alan Greenspan in an interview (February issue of "Gold Investor") with the World Gold Council.

He suggests the inequality is largely down to a north/south geographical divide which means the division between the northern and southern EU countries is too big. The bloc's more prosperous nations such as Germany consistently fund the deficits of those in the south, and that simply can't go on, said Greenspan.

"The European Central Bank (ECB) has greater problems than the Federal Reserve. The asset side of the ECB’s balance sheet is larger than ever before, having grown steadily since Mario Draghi said he would do whatever it took to preserve the euro,” he said.

“And I have grave concerns about the future of the euro itself… The eurozone is not working", added Greenspan.

Greenspan, chairman of the Federal Reserve from 1987 and 2006 has consistently been critical of the eurozone and the European Monetary Union (EMU). He has long maintained that the eurozone was doomed to fail because the impact of the divergent cultures and economies in the bloc has been grossly underestimated.

Greece is currently in the midst of yet another financial crisis with withdrawals from bank accounts and new bank runs indicating the public is preparing for a crash. Meanwhile Europe's oldest bank, Banca Monte dei Paschi di Siena, in Italy is on the verge of bankruptcy and needs another bail out to survive.

Even Germany's largest lender Deutsche Bank is facing a crisis of gargantuan proportions as it struggles with its shadow banking assets book which is plagued with non-performing loans (NPLs).

Ireland, Spain and Portugal face their own economic challenges and many are doubtful whether there can be any meaningful recovery given the scale of the national debt and total debt burden in the periphery euro nations.

Mr Greenspan said Brexit will almost certainly trigger a collapse of the ECB despite the UK not having adopted the euro:

"Brexit is not the end of the set of problems, which I always thought were going to start with the euro because the euro is a very serious problem."

Mr Greenspan says that investors are diversifying into precious metals and increasingly seeking to buy gold, because there is a deepening lack of trust in the euro and in the banking system.

The former Fed chair, correctly pointed out that investment in gold now is insurance; and it’s not for short-term gain, but for long-term protection:

"Significant increases in inflation will ultimately increase the price of gold. Investment in gold now is insurance..." advised Greenspan.

Given the increasing uncertainty regarding the economic outlook, many investors internationally are now considering how to buy gold for the first time. A prudent diversification into non bank, non digital, physical gold will protect and grow their wealth in the coming years.

"Gold Investor" with the World Gold Council can be accessed here

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Mark O'Byrne is executive and research director of www.GoldCore.com which he founded in 2003. GoldCore have become one of the leading gold brokers in the world and have over 4,000 clients in over 40 countries and with over $200 million in assets under management and storage.We offer mass affluent, HNW, UHNW and institutional investors including family offices, gold, silver, platinum and palladium bullion in London, Zurich, Singapore, Hong Kong, Dubai and Perth. 


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