In this week's Off the Cuff with Mish & Chris podcast, Mish has the week off, so Chris and Adam sit down to discuss:
- Europe: What will be the implications of the newly elected leadership in France and Greece?
- Gold: Will the free fall in price end soon?
- The Markets: Will things stabilize soon, or is a bigger correction in the picture?
There is a lot of news afoot this week, including the breaking announcement today from JP Morgan admitting to unexpectedly large trading losses (in the $billions) right after this interview was recorded. We appear to be entering a time in the markets where it's important to make sure your seat belts are securely fastened.
Ch-ch-changes…
The odds for further austerity in Europe are looking very dim in the aftermath of the recent elections in Greece and France. Sarkozy lost to Francois Hollande, the first socialist to be sworn in in decades. Hollande ran on a platform of "growth" and has wasted no time in demanding that Germany renegotiate the Eurozone's financial treaty in order to reduce its stringent austerity measures.
Greece managed to conclude its elections with a government that has no majority coalition. Seeing as most of the politicians voted out were replaced with candidates who opposed the crippling spending cuts that have been imposed on the country to-date, a loosening of those policies seems highly likely.
The natural conclusion from these trends and the worsening signs elsewhere on the continent (particularly in Spain and Portugal) is that further liquidity from the ECB in the future is a pretty safe bet.
Chris spends time explaining that the world's central banks are coordinating their efforts tightly these days to make sure no one major fiat currency upsets the delicate balance of foreign exchange by depreciating too quickly vs. the rest. So, if one country prints, the others follow suit (in overt or covert ways) to keep things in check. So, if we know the ECB is going to print more euros, you can have confidence the other major economies will increase their money supply, too.
The True Benchmark
Which, of course, brings us to the precious metals: the true benchmark that fiat currencies all devalue against.
Chris believes we're seeing similar signs as we did in 2008 of a liquidity crisis. In such crises, the precious metals first lose value as speculators get squeezed
by kugscheese 
