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« Gold Headed To Old High, But Gains In Silver Will Be Historic | Main | Silver To Eclipse $100 On Skyrocketing Chinese Demand »
Wednesday
Jul172013

Long-dated Portuguese Bonds Approach Restructuring Levels

Chart courtesey of Bloomberg

Text courtesey of WSJ: Portuguese politicians still have a few days to go before their self-imposed deadline to forge a “national salvation pact” and find a way to reaffirm their commitment the country’s bailout terms.

But many bond investors, it seems, have already already made up their mind: the country just isn’t going to be able to pay back its debt, as it stands.

Bank of America-Merrill Lynch reckons that looking at the current price of the country’s 30-year bonds—around 65 cents on the euro—bond investors are already pricing in a “significant possibility of a debt restructuring.”

And with both 5-year and 10-year Portuguese yields currently flirting with the 7%  level (bond yields rise as prices fall, and 7% isn’t good),  the bank points out that the prospects of Portugal being able to fund itself independently in the capital markets by mid-2014 are diminishing substantially.

To read this article in full please click here.

At the moment the Fed Chairman, Ben Bernanke, has center stage, but we must keep one eye on Europe where things are far from settled as this rise in Portuguese bond rates indicates.

With gold, silver and Uranium stocks being out of favor one must decide if this is a problem or an opportunity. We have steadfastly refused to buy gold and silver mining stocks for the last two years and as evidenced by the HUI we feel that our decision to hold back has been vindicated. The damage done to the mining sector may not be over yet but this demise is starting to offer up some exciting opportunities in my view.

 

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