The markets were full of contradictions last week. Take for example the turmoil in the Middle East. In past crises, investors flocked to the U.S. dollar. But not this time. The U.S. dollar futures contract fell to 76.41 last week.

Another contradiction: the U.S. jobs report was the best in two years, with 192,000 new jobs added. The stock market should have rallied strongly. Instead the Dow fell 88 points. The crises in Libya and elsewhere overshadowed the favorable jobs picture.

The trends that drove gold prices higher in 2010 are still in place. In the U.S., the Federal Reserve is buying $600 billion in treasuries in an attempt to keep interest rates low. Low interest rates encourage higher gold prices.

In Europe, the situation is still unstable. The European Central Bank (ECB) has stepped up its purchases of member nations' bonds. Spain is still on the table as a country teetering on verge of a bailout. Until the European mess is settled, gold remains a surrogate currency.

In an interview with CNBC, Warren Mosler, principal broker dealer with AVM, lays out his argument for the euro's rise to $1.50.

His main argument is that Europe is creating austerity measures that are curbing inflation and thus strengthening the euro. Notwithstanding the fact that the European Central Bank (ECB) is buying bonds from weaker members like Greece, Ireland, Spain and Portugal, these moves will not create inflation. No longer can speculators attack a single country like Greece and in doing so take down the entire eurozone.

Both the Bank of England (BOE) and the European Central Bank (ECB) signaled they believe their economies need further help from cheap money as they announced Thursday morning that they will be leaving interest rates low and unchanged.

The BOE left interest rates at 0.5% -- where they have been since March 2009. The ECB left interest rates at 1% -- the same level they have been at since May 2009.

Without giving much detail, George Soros says "The euro is a patently flawed construct."

Let's elaborate on this point. The greatest flaw in the euro is that it's a currency without a country. Instead you have a group of 16 countries that have agreed to use the euro as legal tender. This means that 16 separate political systems have agreed in principle to follow the rules of engagement, to use a military term. Those rules state that each country must keep its debt level to 3% of GDP.

Just a week or so ago, traders and analysts were looking for the euro to trade at parity with the U.S. dollar. Now it seems that the markets got turned upside down.

The euro has powered higher for the last several days and is now trading above $1.25 The reason given was traders were worried that banks would have to borrow heavily from the European Central Bank (ECB) to meet their financing needs. However, they borrowed less than anticipated. Then there was the fear that Spain would not be successful in issuing 3.5 billion euros of five-year bonds. That also did not happen.

So, how is that Summer of Recovery working out? Following Tuesday's drop, the market was slightly lower Wednesday morning thanks in part to the ADP payroll report. According to the report, employers added 13,000 jobs in June, falling short of the consensus estimate for 60,000 jobs. This data looks at private-sector jobs only and suggests that payroll gains were tame in June thanks to small businesses that were cutting jobs.

All of Wednesday morning's news wasn't bad, as the European Central Bank (ECB) offer of three-month funds came in short of expectations. This data means that the region's banks may not be as ECB-dependent as some thought. In addition, the financial sector is prospering as the exposure to European banks was made to appear a bit less toxic. Furthermore, Democrats in Congress decided to take a bank tax off the table in the new financial overhaul bill. This move has helped bring Republicans on board and makes the bill look like it may pass.

Spanish banks are scrambling to borrow record amounts from the European Central Bank (ECB) for fear that they will not be able to borrow from international capital markets.

Last month, Spanish banks borrowed 85.6 billion euros from the ECB, double the amount borrowed during the Lehman collapse, and amounting to 16.5% of all loans granted by the ECB. This is the highest amount since the launch of the eurozone in 1999.

The European mess is still smoldering. The greatest fear among traders is that eurozone governments will be unable to enact or follow through on the austerity measures needed to bring deficits under control.

Last week Hungary joined the club of distressed nations. Yet, over the weekend, Hungary's government sought to reassure investors saying that the country is not facing a sovereign credit default.

The EU and the IMF have agreed on a €720 billion loan guarantee fund to stabilize the eurozone. The plan was formulated over the weekend to calm markets throughout the world and stabilize the euro.

As part of the plan, the European Central Bank stands ready to buy eurozone government debt if needed.

Of the €720 billion, €440 billion would be provided by eurozone members and a further €60 billion supported by EU members through the expansion of balance of payments facility. The remaining €220 million would provided by the IMF.

With reference to the Greek debt crisis, Moody's said: "banking systems faced very real common threats if doubts were raised about their governments' abilities to pay debts."

Moody's was referring specifically to the UK, Irish, Italian, Portuguese and Spanish banking systems. Banks shares have fallen sharply across Europe. In France, Societe Generale (SCGLY) was the biggest loser, with its share price falling 7%. It holds $3.8 billion of Greek government debt.

When the financial meltdown occurred, the U.S. Federal Reserveslashed interest rates to zero and bought U.S. treasuries to keep interest rates low.

The European Central Bank (ECB), which represents the 16 countries in the eurozone, does not have this power. Nevertheless, investors are looking for the ECB to intervene in the markets to stem the fall of the euro. In fact, ECB president said the matter was not discussed at their recent meeting.

Thursday's events in Europe provided some encouragement, if not universal calm, regarding the Greek debt saga, including the promise that Europe and the International Monetary Fund will now move relatively swiftly to put together a suitable package that will assist the Mediterranean nation's transition to fiscal solvency.

But even if Europe again show signs of "snatching defeat from the jaws of victory," investors should not anticipate a sudden return to the barter system, globally.