Spain on Verge of Being Bailed Out

Spain moved one step closer to being bailed out after the German Parliament voted to allow the plan to go forward on Thursday, and then the finance ministers of the 17 member countries using the euro gave their approval to the terms offered in the bailout, which stands at an offer of just under $123 billion.

As usual in the news cycle, Europe's horrendous economic problems flow out of the eye of the public for a week or two before again appearing in the news, reminding everyone listening of the dire circumstances continuing to unfold there.

Reminders of the economic turmoil in the region hit the stock market, led by the banking stocks getting hammered, as they are the most vulnerable initially to such news.

The KBW bank index (.BKX) dropped 1.9 percent, ending the week down 2.3 percent. All the major American banks closed down on Friday.

Gold and silver on the other hand were able to finish slightly up on the day, as growing anticipation of another round of quantitative easing is slowly pushing the price of the two precious metals up even as bears attempt to pull them down.

There isn't enough conviction on either side of the trade to allow for major moves lately, and so both metals have been trading in a narrower range lately until more clarity emerges. The failing global economy will pressure the Federal Reserve, Ben Bernanke, and other central bank officials in certain parts of the world to take steps. It's only a matter of when, with each passing day of bad news gradually turning the sentiment in that regard.

Gold and silver should gradually move up until we're hit with the first big announcement. This one helps, but it'll take one more big push to send gold and silver prices soaring again. Most think it's likely to happen in the latter part of August, but it could easily happen earlier as negative economic news continues to mount.

One of the major obstacles for gold and silver is when announcements like this come out of Europe the euro takes a big hit against the U.S. dollar, keeping the prices temporarily in check. That happened again Friday when the euro dropped to about a two-year low against the U.S. dollar, falling as low as $1.2143.

For Spain, the 10-year bond soared to new highs as measured by the introduction of the euro, now bringing yields of 7.3 percent; a number experts see as unsustainable.

The Spanish government also slashed its economic growth projection, revealing the certainty Spain will continue to be in a recession at least through 2013, and quite probably beyond.

For the Spanish banks and the bailout money, there will be assessments of the needs of the banks in the country, and from their stress tests applied to guide the allocation of the funds. That should be completed sometime in September.

How much of the available funds that will be used by the Spanish won't be known until that time.

While the IMF has no administrative or official relationship to the funding proposal, it did say they are available to give "independent advice" concerning the bailouts of the Spanish banks, and if there are no objections, will publish reports concerning the progress the financial firms make toward recapitalization.

The reports won't point out any specific banks, but will focus on the overall progress of the banking industry in Spain.