Why gold can solve Greece’s crisis

Goldex Team

Editorial content

Greece is a land brimming with fascinating and diverse history. It was at one time, the richest nation in the world because it held more gold than any other nation. The country’s gold reserves still exist today with Greece reportedly having 149.1 tonnes of gold reserves at the end of 2016, which amounts to 5.26 billion euros, according to a report by Reuters.  

Greece’s gold reserves

According to the Bank of Greece, it has gold reserves amounting to 149.1 tons stored in Greece (47%), Britain (29%), the U.S (20%) and Switzerland (4%). Saving part of the country’s gold reserves ensures its needs are covered under exceptional circumstances.

The Greek newspaper The Athens News reported that almost half of the gold reserves are in vaults and have not moved in the last decade due to the fact that this gold is stored abroad at the European Central Bank. With less gold in the country during the economic crisis, Greece’s fall was guaranteed. Why? Let’s find out!

A glimpse of Greece’s crisis

The Greek debt crisis was caused by the dangerous amount of debt owed to the European Union between 2008 and 2018. In 2010, Greece reported a potential default on its debt thus threatening the viability of the Eurozone itself. To avoid default, the EU loaned Greece enough money to continue making payments.

Since the start of 2015, various European authorities and private investors have loaned Greece in excess of 294.7 billion euros, which is reported to be the biggest financial rescue of a bankrupt country in history. Up to date, Greece has only paid back 41.6 billion euros and is scheduled to repay the total amount through 2059.

Tit for tat

In return for the loan, the EU required Greece to implement austerity measures such as increasing VAT and corporate tax rates. These measures are aimed to strengthen the Greek government and financial institutions in the country, to close all tax loopholes and create an independent tax collector to reduce tax evasion rates.

At the same time, Greece reduced incentives for early retirement and raised the rate of worker contributions to the pension system. These measures led Greece to privatize many state-owned businesses such as electricity suppliers.

Why gold can solve Greece’s crisis

Results of austerity measures

Despite these austerity measures, many aspects of Greece’s economy are problematic. The government has shrunk and is inefficient. Government decision making is centralized hence slowing response time.

Tax evasion has gone underground with more people operating in the black economy and leaving fewer people paying higher taxes and receiving less from the government. Banks have not completely recovered causing hesitation when approving new business loans. Some experts believe that It will be a slow road to recovery if gold does not step in to solve Greece’s crisis.

Gold as a solution to Greece’s crisis

Gold zigs when the economy zags. When economic growth slows or stops, so do real estate prices, revenues and the demand for commodities thus leading to assets losing their value.

Asset correlation lessens or even eliminates a fall in a person’s portfolio during an economic collapse. Gold is largely uncorrelated to stocks and many other investments therefore, when stocks and other investments fall, gold rises. Having known this fact, gold can solve Greece’s crisis thus making it have a secure financial future.

Gold is useful in a complete economic collapse because it preserves wealth – in fact, gold has a 5,000-year history of doing just that. Gold is both useful and valuable to a country such as Greece. Gold is scarce and in high demand compared to other precious metals.

Greece can invest heavily in gold and use it to trade with markets globally, resulting in the country standing on its feet. Gold has a reputation of saving many investors from bankruptcy and huge economies from failing and therefore it may help the Greeks.

As the world continues to be more turbulent, both economically and politically, gold is making the headlines. As always, when things are uncertain, gold is the safe way to store wealth. With apps such as Goldex, you have 100% ownership of gold bars. These are securely stored in various, world-class international vaults, fully insured and held in trust, legally safe from creditors.



Important disclaimer: this document is not an official research report and the views expressed in it are those of the authors. The authors are not registered research analysts and there is no assurance the trends mentioned will continue or that the forecasts discussed will be realised. Gold as a commodity is not a specified investment for the purpose of giving advice under the Financial Services and Markets Act 2000, therefore, this it does not give rise to rights to claim compensation under the Financial Services Compensation Scheme.