Euro, Dollar, Not a Single Set of Cojones In the Bunch
Currencies / Fiat Currency May 13, 2010 - 05:10 AM GMTBy: Graham_Summers
Europe officially joined the Moral Hazard club in a big way over the weekend. Having put off the “Greek” issue for five months they finally caved, launching a $1 trillion bailout AND their own variation on the Fed’s Quantitative Easing Program at the same time.
The implications of this are two-fold:
- The Euro is going to parity with the US Dollar
- Gold is now the top currency in the world
Regarding #1, the Euro only bounced for a brief 24 hours before continuing its slide. It is now clear that the world markets are like a drug addict, needing a bigger and bigger “fix” just to stay “high.”
The fact that Europe launched the largest single bailout in history and only bought a day’s worth of gains tells you all you need to know about just how saturated with debt the entire world is.
Regarding #2, Gold has broken out to a new all time high in both the US Dollar AND the Euro. In plain terms, Gold is no longer an inflation hedge or anti-Dollar trade. It is a stand-alone currency. In fact, it has traded higher at the same time as the Dollar!
If you do not already own Gold, you should strongly consider buying some now. Europe’s moves were a clear signal to the world that it’s a “race to the bottom” in terms of currency devaluation. With every central bank in the world willing to turn their currency into toilet paper, why not own a currency that you CAN'T wipe with?
Which brings us to my final point.
The final conclusion to draw from this is that there is not one politician in power worldwide with a set of cajones. When it comes time to choose between doing the right thing (default, clear the junk, start over from a fresh base) our “leaders” have shown time and again that they’d rather throw more taxpayer money at the problem.
In plain terms, no one wants to actually solve anything. All they want to do is put a band-aid on the issue and hope they can make it to their next election retaining their corporate backers without pissing off voters too much.
It’s a heck of a tight rope act. I don’t know how it will play out. I don’t care too much for politicians, but I sure as heck wouldn’t want to be in their position. On one hand you have increasingly pissed off voters. On the other hand you have banking Oligarchs who implode the market anytime they’re threatened.
Whoever tries to fix all this better have a pair of Gold-plated Cajones!
Good Investing!
Graham Summers
PS. I’ve put together a FREE Special Report detailing THREE investments that will explode when stocks start to collapse again. I call it Financial Crisis “Round Two” Survival Kit. These investments will not only help to protect your portfolio from the coming carnage, they’ll can also show you enormous profits.
Swing by www.gainspainscapital.com/roundtwo.html to pick up a FREE copy today!
Graham Summers: Graham is Senior Market Strategist at OmniSans Research. He is co-editor of Gain, Pains, and Capital, OmniSans Research’s FREE daily e-letter covering the equity, commodity, currency, and real estate markets.
Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.
Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.
© 2010 Copyright Graham Summers - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
Graham Summers Archive |
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
