The European Phoenix Burns by the Recession

European Gold coins

The richest region on earth, matured and celebrated its re-birth in the second millennium is facing big-time problems. But just like the phoenix, Europe rise again from its aches.

Half of the European countries were former members of the USSR and ache from the absence of proper infrastructure. Others were poor countries that suffered from military occupation form their stronger neighbors for centuries. The remaining countries were in continuous wars for more than three straight centuries. All these factors had their impact on each state in the newly-formed Eurozone.

We watch every day in the news four European states suffer from deficit; Greece, Cyprus, Spain and Italy. If the current circumstance continues, Greece will be default, Cyprus following. Italy and Spain are somehow doing the rain-dance and hoping it will suffice.

On the other hand, the big-boys, Germany and the UK, have to shoulder the Eurozone economy till the phoenix could regain its health. But how does all this affects the gold market?

People buy gold because their confidence in the economic performance of the governments is shaken. That’s the main reason behind Asian and Middle-Eastern ever-growing need for gold. Maybe this idea reached Europe, especially after a great recession than can be compared to the events of The Great Depression in 1930s.

Therefore, Europe still didn’t raise the white flag, and as long as it continues to put up a fight against these circumstances, the demand from Europe on gold will stay relatively weak. On the other hand, if the depression current was too strong to stand up against it, we should see a surge in the gold market from both sides, the demand side and the supply side, which should increase gold prices.