I would short gold but I fear there will be a dead cat bounce
My understanding is that investors fear that many of these countries that are in deep debt beyond their ability to pay will be forced to sell their gold reserves and thus flood the market with gold. I guess anything is possible. In the case of Europe though, it may be much more possible than here in the US. In the US we can print more money because we are allowed to and use the Fed to this end, thus we are not forced into a corner where selling gold is our only option. However any individual country in Europe does not have the power to print Euros, and thus a gold sell off may be the measure of last resort, before they start selling off their land to foreigners. Or they can simply default.
In the socialism end game when they run out of “other” people’s money to pay for things and borrow money instead, this is where it all ends. In the long term, you always have to pay for what you consume. If socialist would not be so greedy it might actually work but they always want more and thus it always leads to economic collapse except in a few rare cases where the culture is uniquely predisposed but this is a rarity. Here in the US we not and never will be. We too would follow this path is the pendulum tips, if it has not already.
Would we spend our children’s future earning if we truely cared about them? Probably not. In this light socialism is the ultimate form of selfishness. And to feel better about it they convince themselves that they are not doing what they are doing. If a serial killer can feel justified in what do I’m sure that a socialist can as well as the deed is not as nefarious. But it is still a dirty deed none the less. It doesn’t matter that they have convinced themselves that it is not and use each other’s mutual agreement as reinforcement of those feelings as if like mindedness makes it right. The end result is still the same, which is that many people suffer because of what they did. Bottom line. They make things worse, not better.