Gold prices closed slightly lower, but gained for the week as investors worry about the sharp losses on Wall Street. U.S. stocks suffer big weekly loss, Nasdaq now below 4,000. Gold last traded at $1,319 an ounce. Silver at $19.95 an ounce.

Merill Lynch used to be bullish. Not anymore. Bank of America/Merill Lynch is now calling for a “10% to 15% correction” in the US stock market later this year.

They may be a little tardy in their call. All major stock markets around the world are sharply lower today. In fact the Nikkei index in Tokyo saw its largest weekly fall in three years this week. Shanghai and Hong Kong were also down. The news was the same in Europe. And today, all three major US stock indices are down, egged on by a disappointing earnings report from financial services giant JPMorgan.

One famous market expert believes conditions in the stock market will get far worse before they get better. Marc Faber told CNBC yesterday that he expects a crash in the stock market worse than the one experienced in 1987, when the down fell 20%+ in one day. Faber points out that underlying earnings have not supported stock market performance for some time and will eventually precipitate a major sell-off.

Of course exogenous events could touch off such a sell-off in stocks. One possible factor that has been largely forgotten but could re-emerge is the economic crisis in Europe, which has never been truly resolved. A panel of European university economists warned yesterday that the Eurozone debt crisis persists and could re-erupt on a larger scale.

National debt for several European nations remain precarious. Italy’s debt is 130% of its annual GDP. Greece’s is 170%. These conditions are a recipe for disaster if there is an economic downturn. Economists also worry that European politicians act as if the crisis is history and they say that is far from the case. A crisis over the Ukraine, a crisis involving Iran or the impact of a slowdown in the Chinese economy could all create the conditions in which Europe could be dealt an economic catastrophe.

Meanwhile, here in the US, the second sign of rising inflation in the past week appeared. The Producer Price Index was up 0.5% during March, the fastest rate in nine months, owed largely to higher costs experienced by clothing retailers, grocers and wholesalers of chemical goods–a broad base of inflationary pressures.

What’s more, some inflationary pressure could be building in the pipeline. The price of unprocessed goods such as animal feed or sheet metal has risen by 5.8% in the past 12 months, the biggest increase since last summer. If those costs keep rising, they could eventually push up the price of wholesale goods and filter into consumer products.

This could introduce a whole new economic factor into the investment calculus.

Expectations of higher inflation could further buoy gold prices; along with a softening dollar. Banking giant HSBC’s take on the recently released Federal Reserve Open Market Committee meeting minutes was that policies over the near-term would weigh on the dollar and support higher gold prices.

Finally, Harvard University released a study this week indicating that each American worker’s personal share of our government’s national debt is a whopping $106,000. In other words, every employed American would have top pay $106,000 to pay off the national debt. If the debt was spread across every person living in the US, that figure would “only” be $52,000.