The euro currency rebounded and gold futures headed lower after Italian President Giorgio Napolitano announced that Prime Minister Silvio Berlusconi will step down after the nation’s Parliament approves a new austerity bill.
Berlusconi’s resignation followed Parliament after he was unable to shore up an essential majority in Parliament, leading to calls for his removal from office.
The euro spiked from near 1.378 toward 1.385 against the U.S. dollar following the news, while COMEX gold futures slid from an intra-day high of $1,804.40 to near $1,790 per ounce.
U.S. equity markets rebounded as well, with the S&P 500 Index higher by 0.5% at 1,267.95 in afternoon trading.
While financial markets showed a positive initial reaction to the news, Fil Zucchi of Minyanville.com warned that investors should “be careful what they wish for.”
“If Berlusconi resigns, the consensus seems to be that a ‘technical government’ can step in, implement the reforms required by the European Union, and reverse the growing credit crunch affecting Italian bonds,” Zucchi noted. ”This is, in my humble opinion, complete and utter nonsense. After 10 years out of office, the opposition bloc will do its darn best to regain power through snap elections. And if the center-left were to win, their agenda would consist of the only thing they have known since 1945: increasing taxes on the rich and redistributing the money for their own benefit. There is nothing further from the mindset of Berlusconi’s opponents than the concept of fiscal restraint.”
Zucchi later wrote that “Before the world markets get too giddy over the downfall of an admittedly slippery character, they might want to be careful of what they are wishing for — unless a drying up of tax receipts, capital flight, and a run on the banks are part of the stabilization program for a country already on the edge of insolvency.”
Klondex Mines Makes “Excellent Headway” at Fire Creek Gold Property
* The underground program is testing the Main Zone mineralization to help further define the Fire Creek mineral resource and to guide underground development.
* In late September Klondex received regulatory approvals to construct new drill roads and drill pads required to complete the 2011 drilling program and that work is now being completed.
