Earlier today the ECB Caved in on "Temporary" Defaults and Collateral.

It is important to note that the ECB did not "allow" a default, rather the bond market forced the ECB to accept default. The stock market reacted as if the announcement meant something, but gold gave a big yawn.

Gold Daily Chart

Gold Weekly Chart

Of course there are so many problems it is hard to know what gold is or is not reacting to.

Partial List of Problems

Sovereign debt default crisis in Eurozone PIIGS: Portugal, Ireland, Italy, Greece, and Spain.
US debt ceiling concerns
US fiscal deficit concerns
US total debt concerns
Reckless, unsustainable credit growth in China
Rampant inflation in Brazil, Russia, India, and China, the BRIC countries.
Yuan peg to the US dollar
Debt and deficit concerns in the UK
Japan interest rate and total debt concerns
Massive global trade imbalances

I could easily add another 10 items related to global housing bubbles, demographics, unfunded future liabilities, state pension plans etc.

The idea this announcement solved anything is complete silliness and gold's reaction with a big yawn was well deserved.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

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