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Just when it all seemed to be going so well in in Europe, another potential crisis looms.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Italy will hold a referendum on Sunday on whether or not to change the country’s constitution. The country’s center-left Prime Minister, Matteo Renzi, has promised to resign if the electorate rejects his proposals. At stake is political turmoil as Euroskeptic comedian Beppe Grillo’s Five Star Movement (M5S) is just a few percentage points behind the Democratic party in the polls.

Meanwhile, the global financial crisis saddled Italy’s banks with around $384.4 billion (€360 billion) of bad debt and there is no good solution to a growing bank crisis.

Source Independent Newspaper

Source: The Independent Newspaper

Unfortunately for Italy, new E.U. rules forbid governments from bailing out banks. Instead, they demand that shareholders and bondholders be what the Economist terms “bailed in,” forcing them to accept any losses that would otherwise be picked up by taxpayers.

Worse, in Italy bank debt worth around €170 billion is in private hands and it seems unlikely that in the current climate any Italian government, let alone M5S, would stand by while voters lost their savings. They may be tempted, therefore, to ignore the E.U.’s rules and rescue Italy’s banks, causing a split with Brussels.

Italy’s Plight

After Greece, Italy is earning the title of the sick man of Europe. Growth has not just stagnated but fallen and populist policies will not solve the economy’s long-term challenges.

Source Independent Newspaper

Source: The Independent Newspaper

Italy is far from alone in feeling the effects of the populist wave sweeping across western politics. In Italy, as in the U.S. and the U.K., the electorate is feeling empowered to vote against things they don’t like rather than necessarily voting for an uncomfortable reality.

Two-Month Trial: Metal Buying Outlook

The five-star movement has said it would hold a referendum to decide whether Italy should leave the Eurozone, looking at what the E.U. has done to Greece, who could blame them? After the U.K.’s decision to leave, should another large and economically important economy like Italy decide the same it could herald the breakup of the single currency. (more…)

Zinc, lead and tin all hit multiyear highs this week and the Organization of Petroleum Exporting Countries finally agreed on a production — with its own members and Russia — to cut back production so oil prices are up, too.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

We were already in a metals and commodities bull market before the beginning of the week but it’s now more like a bull stampede. They’re even running in India. Lead Forecasting Analyst Raul de Frutos notes that this bull market is particularly unusual because it coincides with a strong U.S. dollar. Since commodities are valued in dollars it’s odd that they’re both up — and rising — at the same time.

MetalMiner co-founder and editor-at-large Stuart Burns also chimed in with vexing information, noting that tin is up while there seems to be abundant to robust supply of the stuff in the Earth’s crust with stable nations and reliable companies set to mine it.

Bulls stampeding in a Madrid sculpture

Don’t get stuck under these guys in the rush to get into this market. Source: Adobe Stock/Kyrien.

So, supply and demand aren’t fueling tin’s rise and that’s likely true for other metals as well. “New money,” as they say, is flowing into metal markets as investors are excited about Chinese construction demand and the prospect of a still nebulous $1 trillion infrastructure plan here in the U.S. China is, once again, driving the demand boat as the U.S. consumes only about 8% of commodities worldwide and the People’s Republic consumes the most. (more…)