Grand Rapids, MI -- (SBWIRE) -- 04/24/2013 -- Financial advisor Dennis Tubbergen can usually be found helping his own clients. When he has a few free minutes he is busy writing his daily blog, his weekly newsletter Moving Markets or interviewing his next guest expert for his weekly radio show.
Tubbergen's next guest is Chris Martenson. Trained as a scientist, Martenson completed a PhD and post-doctoral programs at Duke University in neurotoxicology. In the midst of a very successful career, Martenson gave up being a vice president at a Fortune 300 company, moved from New York to rural western Massachusetts and began very successfully managing his own portfolio.
Martenson is the creator of “The Crash Course,” a 20-chapter online video course that educates viewers on our broken economic system, the crisis of population demographics, and Peak Oil.
Tubbergen, who is an author, radio show host, and CEO of PLP Advisors, LLC, spends a lot of time giving his opinions on the economy in his online financial blog. On April 17, 2013 his blog was titled Gold Takes Center Stage in Europe.
"By now you are probably aware that the country of Cyprus will be forced to sell some of the country's gold reserves to meet its financial obligations," began Tubbergen. "An article published in The Financial Post reported that Cyprus will sell the equivalent of $500 million in gold and speculated that other European countries may be next."
Below Tubbergen quotes from the April 13, 2013 article.
Heavily indebted eurozone nations such as Italy and Portugal could come under pressure to put their bullion reserves to work as a result of plans for Cyprus to sell gold to meet its financing needs.
A European Commission assessment of what Cyprus needs to do as part of its European Union/International Monetary Fund bailout showed Cyprus is expected to sell its excess gold reserves to raise around 400-million euros (U.S.$523-million).
Other struggling euro area countries may be pushed to take note. Between them, for example, Portugal, Ireland, Italy, Greece and Spain, hold more than 3,230 tonnes of gold between them, worth nearly 125-billion euros at today's prices.
The lion's share of that - 2,451.8 tonnes - belongs to Italy. But Portugal and Spain also hold hundreds of tonnes and gold is currently trading around US$1,558.95 per ounce in spot terms, or 1,189 euros.
The metal makes up more than 90% of Portugal's foreign exchange holdings, and 782.2% of Italy's. India, by contrast, holds less than 10% of its reserves in gold.
Gold sales on their own would be far from a magic bullet to solve eurozone financing problems: Italy's entire gold reserves, for example, are worth less than 95-billion euros, against outstanding debt of around 1.685-trillion euros.
But the Cyprus situation shows that even a relatively small gold sale may help address severe debt problems. Cyprus' gold sale would allow it to easily come up with around 3% of what it must contribute to the bailout.
It is something that has the market somewhat concerned given that a big sale would push down the price. Central bank gold buying was one of the few areas of demand to increase last year at a time jewellery, coin and gold-bar buying was on the wane.
Indeed, spot gold posted its biggest one-day drop in nearly two months on Wednesday after news of the planned sale broke.
"Cyprus may be a one-off, (but) the market's concern will be that it isn't, and that other countries will be invited to sell their gold," one senior gold trader said.
"It's a potential game-changer for the market," he added. "Given we know that Portugal rejected the most recent austerity plan, and they have over 90% of the country's foreign exchange reserves in gold, does this mean that Portugal perhaps will be asked to sell some of its gold?"
"Last week, gold prices broke down from a significant point of support going back over one year," explained Tubbergen. "Trading volume was high."
According to Tubbergen, that could mean that gold prices will continue to fall from here. Short term, should the financially-troubled European countries be forced to sell some of their gold reserves, gold prices could break down as well.
"However, longer-term gold prices will likely recover, in my view," concludes Tubbergen. "With the world's central banks printing money at a frantic pace, creating 'a race to the bottom' in currency valuation, the outlook for gold is bullish in my opinion. However, given these facts and the recent price action, a continued pullback from here in gold prices before a new rally follows would not be surprising."
To read the blog in its entirety go to http://www.dennistubbergen.com and select his April 17, 2013 entry.
Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.
About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to www.moving-markets.com.
The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.