With all the bad political economic news this weekmit is notnthatbsurprising to see gold flying ahead in the markets. It is certainly not good for the world economy to have a big crisis in both the Euro and Dollar at the same time.
Germany looks to me to be making the same mistake itndid during the Weimar days. Then the industrialists were to have inflation and Government subsidy as they earned their money abroad and kept it there. Today with the Greek crisis theybare happy to reap the industrial rewards of a weak currency but not keen on paying any price for this. This is not to say the Greeks, Irish etc are not to blame. Just that in 1921, there were uncanny similarities with Germany blaming everyone else for their own poor policy decisions.
Having said this, I think today's policymakers in the US and Europe will traps the nettle and find a way manage the sovereign debt crisis because they simply have to given the market reactions in both bond and equity prices. So maybe gold won't last above $1600 past the end of the summer, a risky bet though.