Spot Gold Drops on Dubai’s Default News
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The spot gold price opened down over $46.00 an once, but, closed down just $20.70 on the Dubai debt news. Dubai’s debt crisis rattled world financial markets today, raising concerns that some banks could further tighten lending and stall the global economic recovery.
Dubai’s troubles caught investors by surprise. A year after the global slump derailed the city-state’s dizzying growth, its main investment arm, Dubai World, revealed this week it was seeking at least a six-month delay on repaying its $60 billion debt. Credit agencies responded by slashing debt ratings on Dubai’s state companies, saying they might consider the plan a default.
Basically, I believe the greenback will have the stay of execution I have been expecting for some time now and it should rally nicely on this possible default news. In reality, a Dubai default means very little to the US other than a sovereign nation defaulting, but it will trigger a flight to quality.
The world is becoming globalized, and I like it. So this isn’t good. We need to find a way out!
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With the world becoming more dependent on each other, I believe this will hit some other countries hard, maybe not so much once we care a lot about, but certainly they are feeling a hit. Dubai didn’t create itself you know.
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