Key elections to be held a week from Sunday could have a dramatic impact on the gold market. The Greeks, who are the favored scapegoat for eurozone woes, will have the opportunity to vote out the hated austerity measures of the current government.
In France, Socialist Francois Hollande is likely to break the alliance between French Prime Minister Sarkozy and German Chancellor Merkel, two unlikely bedfellows that are often credited with keeping the eurozone intact.
There is nothing surprising in that, it’s how democracy works. Politicians play off common sentiment, no matter how irrational it may be. It is the surest way to power, and power is what the game is all about.
When the people feel deprived by their government’s policies they become easy targets, buying into empty promises fraught with nationalistic rhetoric. They want to believe that the source of their problems lies beyond their borders, so no thought is given to potential repercussions in the global community.
In every election there are voices of moderation, but they are seldom heeded. When chaos ensues, as it often does, the cycle simply begins anew.
Even administrations that began with the best intentions must choose between pandering to the public’s ill-conceived wants or risk being removed from power. Leaders who have the courage to hand their people a bitter pill are seldom given the time they need to bring about lasting change. The new wave slaps a glossy veneer on current conditions while the root causes continue to erode the society’s foundation.
Impending changes in the European leadership could profoundly impact the gold market, but Americans have had their fill of talk about problems across the puddle. We have our own issues to address. But our country is no more able to exist in isolation than is Greece or France.
The same dynamics have been playing out here for the past several years. When our turn comes in November, we too will choose a leadership based on simplistic pseudo-solutions and not the hard truth of what must be done to secure lasting prosperity for future generations. Sadly, things will have to get much worse before people become willing to swallow the pill.
For as long as politics continues to trump leadership, the wise will continue to insure their wealth with gold investments. Gold will keep having its ups and down as governments try to spin their way out of reality, but in the end the gold market will rise above the chaos.