Greece is frozen in a political stalemate. Youth unemployment is running at over 50%. And there has been a $1 billion run on Greek banks.
From near and afar, there appears to be no easy way out, especially now that the euro zone is heading back into a recession.
It's times like these when investors pour into the US dollar for its "perceived safety."
With commodities priced in US dollars, this spike in the greenback has sent commodities – including gold prices– into a tailspin since early March.
That has many doubters asking: "Has the commodities super-cycle ended?"
It's a reasonable question considering the Continuous Commodity Index (CCI) is back down to levels it last saw in September 2010.
What's more, gold prices have backed off to near $1,500/oz., and oil prices have fallen from $110 to $90/barrel.
But as you'll see, the commodities coin does have another side.
The Other Side of the Commodities Story
In fact, a recent article by Frank Holmes, CEO and chief investment officer at US Global Investors, pointed out how China and other emerging nations are in better fiscal shape than much of the West.
Even if China is slowing somewhat, it is still growing at an enviable 8% per year, with only 42% debt to GDP ratio. So rather than go for more outright stimulus, it's expected that China will target new loan growth and its M2-money supply growth to around 14%.
Meanwhile, India and Australia have just lowered interest rates while other central banks are basically refusing to raise rates.
It means the world will keep turning, people will keep consuming and annual demand of raw materials is likely to remain elevated.
As for gold prices, let's cut right to the chase.
Real interest rates are running around negative 2% and thanks to ZIRP (Bernanke's Zero Interest Rate Policy), they're likely to remain so at least until late 2014.
And debt in the West (US, Europe, England, and Japan) has doubled in a little over three years to almost $8 trillion in a veritable monetary flood that's bullish for gold.
On top of all that, the demand for physical gold is still increasing.
According to the World Gold Council's (WGC) Q1 2012 trends review, they see record levels of Chinese demand, surging 10%, for a new quarterly high of 255.2 tonnes. They also see further growth, as the Chinese remain concerned about high inflation persisting.
The demand is so great that China has surpassed India as the world's largest gold consumer.
European demand has also held up well, with physical metals in the form of bars and coins selling at higher than historical levels.
And central banks keep doing their part, with net purchases totaling 80.8 tonnes, or about 7% of global demand. WGC believes there's been a secular shift, with central banks now set to remain net buyers of gold for the foreseeable future.
Yet, gold investors who are dismayed by its recent price action need to be psychologically prepared.