If Greece Exits Stage Left - Silver & Gold Prices Do What?

Greece by itself will probably not have a huge impact on PM prices, although there likely will be some additional buying in Europe. My thought is that Greece will be the fuse that then detonates Italy and Spain. The EU will survive the exit of the smaller members but not the exit or collapse of Italy or Spain. Either of these two countries are too big to bail, so present quite a financial challenge to the EU, ECB, and the IMF. Clearly, they will need US and Chinese help to resolve this situation but who knows if they will get it.

Prices will mostly likely fall for paper silver and gold. As prices fall, premiums for physical coins and bars will go up or availability will decrease as dealers hold back on selling what they have. Long term nothing can hold prices down with the amount of debt in the world and no way to pay it off other than inflate or issue and new type of currency or digital money.

A Greece exit will have more of an impact than you think. First, a lot of goodwill was burned up by Greece's failure to meet it's rescue obligations. This will likely translate into even more severe and less flexible austerity requirements for the remaining PIgS. Second, several news sources have reported that Moody's will likely reevaluate it's ratings on sovereign debt for the entire Euro zone, with downgrades very likely for member countries. Greece may be hurting, but the pain is about to be spread around the rest of Europe very very soon.

A lot of it might depend on "how" Greece leaves the EU. I can envision monetary aid that hadn't been available suddenly coming on line from a variety of different sources that few could anticipate. It bears remembering that the loans Greece received in the past weren't there to bail out the government as much as they were to save the banking sector- due to systemic risk, or so they say. If Greece were to exit the EU but still pay lip service to austerity via whatever government happens to be in power when all this goes down, perhaps the IMF or even the FED would feel obligated to step in an save its Mediterranean banker friends. Some wealthy Middle Eastern country wanting to become a major player from the ground up in Greco affairs, perhaps? Or China or Russia, or even Europe, all over again. It all depends on how a Greek default affects other central banks and how much some countries fear widespread bank runs, potential credit downgrades from doing business with Greek banks, spreading contagion, and a possible double-dip recession or stock market collapse, among other nasty things. I'm spit-balling here, but who'd have ever guessed that Lehman Bros. would have had such an impact on world markets back in the fall of 2008? Not the majority of US economists or government advisors, that's for sure.

Agreed, once the dust settles from Greece leaving the EU, metals will go up. The paper metals traders will panic first though and drive prices down so that they can cover other losses. This has already happened a couple times.

I think what is coming is a separation between paper commodity prices and actual physical metal. You will see much higher premiums for coins and bars over the spot price.

Looks like Greece has finally formed a "pro-bailout" parliamentary majority that's willing to play ball with German plans. Unless this government, too, falls apart and Euro exit fears reemerge, gold's brief rally may retreat into another buying opportunity lasting though mid-summer.

Nothing makes sense anymore regarding metals prices, I believe they are totally manipulated. Greece leaving the EU should be bullish for metals as inflation will skyrocket in Greece. Greece staying in the EU and getting more funny money bailouts should be bullish for metals, more inflation of the Euro. The thing to remember is any time the printing presses run inflation is the result. Spain, Italy, France, Ireland, Portugal are all standing there waiting for their turn at the bailout trough. Germany is going to say enough very soon.