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China has beat Japan as the second-largest economy in the world. With an average GDP growth of 10% for the last 30 years, a population of 1.4 billion, first place in the world’s and consumption and production of coal, steel and energy, and the world’s largest exporter and second-largest importer of good, the country stands a chance at becoming number one soon. (It is also ranks first-place in the world in coal production).

Other news in China is the country’s allowing foreign investors to invest in the Chinese market. A pilot program will allow foreign investors to buy bonds in the Chinese market using Chinese currency.
Shanghai is set to become a world leader in finance by 2020. As a result, they are tapping into corporate investment abroad and could allow foreign companies to sell shares in Shanghai as early as next year. Rumor persists that Shanghai may allow foreign investment in yuan-dominated private equity and venture capital funds as well in the near future.

Since the yuan ended its peg against the dollar on June 19 it has risen by .5 percent. Announcement of the end of the peg causes a 4.8 percent increase in Hong Kong yuan deposits in June. China is now making it easier for yuan transactions between banks and companies in Hong Kong as well as those transferring cash in order to buy wealth-management products.
The rise of the yuan currency combined with rising sentiment about China’s future could make it a good short-term investment for binary options and forex traders.

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A Hungarian spokesman for Prime Minister Viktor Orban has announced last week that an impending economic default is possible given the current economic situation. This combined with past concern over other shaky economies, such as Portugal and Spain, caused increasing fears of the value of the Euro, which fell to a new low of 1.2050 against the dollar.

The spokesman, Peter Szijjarto, accused the past government of covering up lies and information. A detailed report of the Hungarian government’s fiscal plans.should soon be released.
The Daily Forex News reported today that in a Eurogroup meeting yesterday that Eurogroup head and Luxembourg Prime Minister Jean-Claude Junker was “not really concerned about Hungary” and emphasized that the situation was not at all comparable to the economic situation in Greece.

The Hungarian report on its fiscal budget should play a big part in investor confidence in the Euro, which will affect Euro prices.

Source: Gold Alert

Market analysts speculate that gold could be the next bubble, as large investors continue to buy gold along with other commodities as a safe investment against the rising economic instability in Europe and now Asia.

Developing countries have simultaneously been buying gold as a safe and secure place to store monetary assets.

Both reactions have caused a rise in the price of gold over in the last week of May even though demand has fallen in the first quarter of 2010. But what is more interesting is that gold prices are extremely sensitive to sentiment, or people’s perception of the value of the commodity.

Financial investors are largely responsible for the market price of gold, who decide whether they believe the price of gold will rise, and then invest in gold. This causes the price of gold to rise even further, as investor sentiment rises.

The price of gold has been known to fall in times of wealth and economic prosperity, however.  In times of severe economic hardship, as in ware or economic collapse, it has been known to be a fairly liquid investment which can be easily traded for money.

Gold Prices for Last 10 Years (Google Chart)

In the last 10 years,  gold has risen steadily (see chart on side), breaking an all-time previous high of $1,241 an ounce on May 12. Due to the Greek crisis, foreign investors are cautious about investing in the Euro and prefer to invest in the seemingly more stable commodity of gold.

The price of gold, like other commodities is affected by demand and supply. However, since the total amount of gold in the world is already mined and currently in existence, the price of gold is affected more by demand than other commodities. For the right price, market suppliers can sell gold in the marketplace.

But the sudden growth in demand for gold could also contribute to global inflation, especially in light of the current global crisis and the European Central’s bank’s surprising decision to buy bonds of weak government economies. Investors are currently speculating as to whether gold will continue to rise, or if it truly did hit the breaking point on Wednesday.

Gold and other commodities are offered as investment options on our binary options platform.

Greece has been spending more as a country than it has been earning for decades, now burdened with a debt of €300 billion. Past governments covered up the problems and the debt continued to mount.  Recently rating agencies decided that Greek government bonds are worth even less than junk bonds, creating a drop in world markets as investors sold Greek bonds and went for greener and seemingly safer pastures of the UK, Germany, and US government investments.

Countries could lend to Greece to bailout the country, at a rate of 14 percent, a very expensive rate for borrowing. Greece will need to fiercely cutting the budget and create a long-term plan for growth.

As of April 11, Greece is being offered a Eurozone relief package of over €30 billion, of which Germany will pay €8.5 billion, and the IMF €15 billion. Now it looks like a sum of four times that much will be needed to get the Greek economy back on track.

If Greek defaults and declares bankruptcy, this could cause the Euro to fall and also discourage investment in other developing economies of the eurozone states, namely Portugal and Ireland.

Another option is for Greece to  exit the Euro for a temporary amount of time, avoiding massive unemployment and possibly boost the economy by using a devalued currency.

Now world markets are speculating that Portugal, with its large deficit and weak economy,  may be the next market to declare dire financial problems. Ireland is also suffering from a large deficit but has taken measures to reduce spending and is not currently being forecast for declaring bankruptcy.

Germany public option Is against contributing to Greek’s overspending, arguing that they should not have to pay for another country’s pension policy that is better that their own. It needs to pass the package in the German parliament before the money is distributed.

All of this provides ample opportunity to wage bets on the direction of the Euro in the future.