Gold The âUltimate Insurance Policyâ as âGrave Concerns About Euroâ â Greenspan

âThe eurozone isn’t working â¦â warns Greenspan

âI view gold as the primary global currencyâ said Greenspan

âSignificant increases in inflation will ultimately increase the price of goldâ

âInvestment in gold now is insuranceâ¦â

Source: Getty

Alan Greenspan, theÂ former head of the Federal Reserve has warned that the euro may collapse, saying that he has âgrave concernsâ about its future.

The imbalances in the economic strength of euro area countries make the continued function of the single currency area a primary concern, said former US Federal Reserve chairman Alan Greenspan in an interview (February issue of âGold Investorâ) with the World Gold Council.

He suggests the inequality is largely down to a north/south geographical divide which means the division between the northern and southern EU countries is too big. The bloc’s more prosperous nations such as Germany consistently fund the deficits of those in the south, and that simply can’t go on, said Greenspan.

âThe European Central Bank (ECB) has greater problems than the Federal Reserve. The asset side of the ECB’s balance sheet is larger than ever before, having grown steadily since Mario Draghi said he would do whatever it took to preserve the euro,â he said.

âAnd I have grave concerns about the future of the euro itselfâ¦ The eurozone is not workingâ, added Greenspan.

Greenspan, chairman of the Federal Reserve from 1987 and 2006 has consistently been critical of the eurozone and the European Monetary Union (EMU). HeÂ has long maintained that the eurozone was doomed to fail because the impactÂ of the divergent cultures and economies in the bloc has been grossly underestimated.

Greece is currently in the midst of yet another financial crisis with withdrawals from bank accounts and new bank runs indicating the public is preparing for a crash.Â Meanwhile Europe’s oldest bank, Banca Monte dei Paschi di Siena, in Italy is on the verge of bankruptcyÂ and needs another bail out to survive.

Even Germany’s largest lender Deutsche Bank is facing a crisis of gargantuan proportions as it struggles with its shadow banking assets book which is plagued with non performing loans (NPLs).

Ireland, Spain and Portugal face their own economic challenges and many are doubtful whether there can be any meaningful recovery given the scale of the national debt and total debt burden in the periphery euro nations.

Mr Greenspan said Brexit will almost certainly trigger a collapse of the ECB despite the UK not havingÂ adopted the euro:

âBrexit is not the end of the set of problems, which I always thought were going to start with the euro because the euro is a very serious problem.â

Mr Greenspan says that investors are diversifying into precious metals and increasingly seeking to buy gold, because there is a deepening lack of trust in the euro and in the banking system.

TheÂ former Fed chair, correctly pointed out that investment in gold now is insurance; and it’s not for short-term gain, but for long-term protection:

âSignificant increases in inflation will ultimately increase the price of gold. Investment in gold now is insuranceâ¦â advised Greenspan.

Given the increasing uncertainty regarding the economic outlook, many investors internationally are now considering how to buy gold for the first time. A prudent diversification into non bank, non digital, physical gold will protect and grow their wealth in the coming years.

âGold Investorâ with the World Gold Council can be accessed here

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