Gold: Part of Greece’s salvation?

by James Kwantes

It’s not just the ancient ruins that are deteriorating in Greece. With unemployment at 25% and youth unemployment more than 50%, the country’s very social fabric is at risk of unravelling, as austerity’s chokehold produces street clashes and clouds of tear gas.

German chancellor Angela Merkel was greeted with protest swastikas and outrage during her recent visit to Greece, even as she “softened her stance” on bailing out the bankrupt nation.

Greece faces trouble whatever path it takes: A “Grexit” and return to the drachma would introduce its own flavour of pain to the western world’s cradle of civilization.

Is the barbarous relic part of the solution for Greece’s economic woes?

Yes, according to a new article in The Independent. It turns out that Greece is projected to become Europe’s biggest gold producer by 2016 (or “biggest in the area” in the case of a Grexit), surpassing Finland. While red tape and regulatory hurdles used to be the order of the day, Greece is now fast-tracking mine approvals in a bid to help revive its fast-fading economy.

The two companies set to bring gold mines into production in coming years are Vancouver-based mid-tier producer Eldorado Gold and Australia-listed Glory Resources. Eldorado picked up three projects through its $2.4-billion acquisition of European Goldfields last year – which now looks like a canny move indeed.

Here’s the Independent article.

Barclays has started coverage on Eldorado Gold, among other producers, due to a “renewed focus from the gold companies on free cash flow generation above undisciplined production growth,” and Dundee just raised its price target to $16 from $15.

Eldorado Gold (ELD) shares are trading at $14.25 this morning, up more than 2%, on the TSX.

Disclosure: I do not own shares of any company mentioned in this article, which should not be considered investment advice. All investors should perform their own due diligence. Please read my disclaimer.

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  • RUSS SMITH

    Hi!, Patrons Of World Mining Et Al:
    One thing about the barbaric relic, gold, being used as income, it NEVER incurs debt just hard labor mining & minting it into useable funds without paying interest on loans such as bonds or treasuries. This has the potential to become a precursor of potential solutions to many debtors but that will evolve over a longe term of time sequence ASAP. Thank you Mother Nature for placing gold within our reach!!
    RUSS SMITH, CALIFORNIA (One Of OUR Broke States)
    resmith@wcisp.com