Gold, Silver ETFs Higher as Situation Worsens in Italy

August 2nd at 8:56am by John Spence

Italy’s debt crisis continues to escalate amid soaring yields on its government bonds and reports that authorities will meet Tuesday to try and address the disorder in markets.

Yields on Spanish and Italian 5-year bonds reached parity on Tuesday for the first time in over a year, Reuters reported.

Exchange traded funds that invest in gold and silver were moving higher in Tuesday’s premarket on worries the debt contagion is spreading in Europe.

SPDR Gold Shares (NYSEArca: GLD) and iShares Silver Trust (NYSEArca: SLV) were up 1.2% and 2.5%, respectively.

Yields on Italian 10-year bonds spiked through 6% in volatile trading, according to the Daily Telegraph.

“The markets know that the EU’s bail-out find (EFSF) won’t be able to buy Italian and Spanish bonds on the secondary market for another three or four months because the deal has to be ratified by national parliaments,” said David Owen at Jefferies, according to the report. “The longer this paralysis goes on, the more investors fear a break-up scenario where the core countries pull out and leave the rest with the euro.”

Investors have moved into gold and silver ETFs as Europe’s crisis worsens and U.S. leaders push the debt ceiling compromise to the Aug. 2 deadline. [Gold ETF Holdings at Record]

In U.S. economic data, consumer spending declined in June while incomes rose slightly, the government said.

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Full disclosure: Tom Lydon’s clients own GLD and SLV.

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