By Tensing Rodrigues
We were told that the worst is over; but suddenly the Greek volcano erupted clouding the entire Europe.

Weeks later, as Europe struggles to get out of the debt crisis, sunshine alternates with clouds. “Initially the markets welcomed the 750 bn euro stabilisation package like a liberating army, relieving the beleaguered governments of southern Europe”, reported BBC on Tuesday, 11 May. “But as the dust settles, doubts are surfacing over how much the deal can really do to solve the underlying problems.”
The Bank for International Settlements, the central bank of the central bankers, says in a recent research paper: “Our projections of public debt ratios lead us to conclude that the path pursued by fiscal authorities in a number of industrial countries is unsustainable. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability.” Worse still, what few seem to realise, though on paper, the money is supposed to come from Europe’s biggest governments and the IMF, in reality, most of the money may have to come from US. Right now, 17 per cent of the IMF funding pool comes from US; that means American taxpayers are paying for $6.8 billion of the Greek bailout. And, a good part of the rest, US may have to lend to the European nations.
The more money the US prints to bailout banks and other sovereign borrowers, the riskier the US balance-sheet becomes. By the first half of 2010, the Fed had already spent $2 trillion to bail out Wall Street’s banks and the US mortgage market. And because the world’s banking system uses the US dollar as its reserve currency, the Fed has been forced to bail out Europe’s economy. The US Federal Reserve, many believe, has officially become the world’s lender of last resort.
Printing money to bail out borrowers around the world does not solve the problems of overleveraged governments or debt-ridden economies. It simply shifts the risks from private balance sheets to that of the US government. As a result the US dollar has become a ticking time bomb. And that is what makes the gold glitter. The graphic below shows how both Euro and the USD have lost against gold since January this year.
It’s no wonder than that private investors and central banks have thought it right to stock on gold.
According to a Reuters report dated May 13, 2010, the Austrian Mint, which produces the popular Philharmonic gold coin, sold more gold in the two weeks from April 26 than in the entire first quarter of the year because of soaring demand in Europe. The mint sold 243,500 ounces of gold in coins and bars in that period, compared to 205,000 ounces in the entire first three months of the year.  “That’s a clear sign that there is panic buying because of concerns about Greece and the euro,” marketing director of the mint, Kerry Tattersall, told Reuters in a phone interview.
The graphic shows how India’s gold reserves have grown over the last three years.