Euro PIIGS drive Euro gold price to all-time low

Analysts predict billions upon billions of dollars from hedge funds will be put to work on the short side when the euro breaks $1.40.

At an all-time low when priced with gold, the continental super currency fell to its lowest point in 27 months as President Obama signed into law a debt ceiling hike and spending cut.

Gold closed at 1654 today, up .34.

Securities for Portuguese, Irish, Italian, Greek and Spanish (PIIGS) bonds are down across the board with interest rates rising dramatically. Italian bond yields rose 6.06; the spread over German bunds rose to 385 basis points, the most since the euro was introduced in 1999; Spanish 10-year debt rose four basis points to 6.24%; Italy's blue-chip index fell to its lowest in 27 months, the index having fallen 13% over the past month.

Analysts consider Italian debt financing unsustainable.

Italian bank stocks lead the plunge, UniCredit shares having fallen 5.27% to 1.13 euros.