FYI

"Gold leapt $33 an ounce Tuesday to trade at the memorable level of $1234 an ounce-a record. The U.S. and Canadian dollars also rose. What is happening? For starters, Greece has been on the front pages for the past fortnight, for perhaps the second time in 2300 years-the other being the Athens Olympics, which gave a temporary boost to national pride and a permanent boost to the national debt. It turns out that a well-identified condition afflicting investors in bad government bonds-grecophobia-can also be caused by bonds issued by several other members of the Eurozone. Result: big banks across Europe are heavily laden with bonds that the marketplace now discounts. They bought them because, according to Basel rules, they didn''t have to allocate capital to them, as they did for corporate bonds and other supposedly lower-quality debts. That''s why even the Germans went along with a trillion-dollar program designed partly to save Greece and other PIIGS, but mostly to save banks. The European Central Bank abandoned its principles to fund this rescue-so the euro falls. The euro is no longer a store of value. Gold returns to center stage-for a long run."