The Daily Market Report: Gold Retreats Into Range on Hope for Greek Deal

22-Jun (USAGOLD) — Gold has retreated into its well established range, as hope springs eternal for an eleventh-hour Greek deal. As the latest is a seemingly unending string of last-ditch emergency meetings convened in Brussels, there have been a slew of news reports suggesting optimism is running high that a deal will be struck this week.

We’ve certainly heard that a few times this year. However, the Greek government still seems unwilling to move on pensions; something that the IMF is demanding. Greece owes the IMF €1.6 bln, payable a week from tomorrow. Part of that payment has already been deferred from earlier in the month and Christine Lagarde has said that no additional “grace period” will be granted.

The market is quick to jump on any optimism, despite official attempts to temper that optimism. After all, there have been many last-second kicks of the can cobbled together in recent memory. Nobody wants Greece to default; so why wouldn’t they lend them more money to pay back the money they’ve previously borrowed?

Perhaps because there is a growing realization that this vicious cycle leaves Greece ever deeper in debt, with little incentive to make the reforms necessary to make the nation solvent. Even if the additional bailout funds are released, Greece will be right back in the same straights as soon as they blow through those funds.

Fidelty’s Ian Spreadbury warnings of “systemic risks,” are likely driven in-part by Greece. Spreadbury recommends holding gold and silver, as well as physical cash. As the Telegraph pointed out in a weekend article, that’s “an unusual suggestion from a mainstream fund manager.”

That’s very true! You typically don’t get folks from the mainstream financial services industry recommending putting cash under your mattress. The same is certainly true for physical gold and silver. If you want some precious metals, they’ll typical suggest some paper representation of gold and silver; where they retain control of your money, but you don’t really have any gold or silver.

Spreadbury adding his voice to an expanding group of industry professionals talking about heightened risk, may be reflective of just how great said risk has become. The time to buy gold is before the risk event occurs.