Greece and Gold: the odd couple (Global InterGold)

Greece's being on the brink of the abyss is subject to extensive news coverage all over the world. There is no single expert in economy who missed the opportunity to opine on this issue, but is the opinion of gold market experts the one that awakened hope.

What could be the role of this precious metal in the negotiations?

The lengthy negotiations between Greece and the Troika seemed to be over when Syriza – the political party in Greece's government - announced the referendum to approve or not the measures the IMF seeks to impose. Unfortunately, both answers could bring about a near or far future an exit from the Euro.

According to Bloomberg, Greece has 112.5 tons of gold and the 30th position in the World Gold Council ranking. The remaining amount between both figures can be explained if it is taken into account the claim by the Bank of Greece on Greece, that is, the gold paid to the IMF by the bank including quota increases on behalf of the country.

Some may think gold reserves are the answer for Greece's debt, though their current value equals nearly 1% of the public debt. Anyhow, if Greece remains in the eurozone, it wouldn't be possible to sell its gold holdings without permission by the European Central Bank.

What is the impact Greece can have in gold? According to many experts, gold reserves are the ace up Greece's sleeve which could guarantee stability of a new currency in case of 'Grexit', and in turn, gold would benefit more from the financial volatility of such exit, rather than from a massive sale of gold reserves.

The confidence gold guarantees to support the economy if negotiations fail ought to be a fact to bear in mind by countries which future could be related to that of Greece. As for the IMF, when the show in Greece is about to begin, it can just ask the rest of countries to take their seats and avoid a probable conga towards the exit.

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