Saturday, February 27, 2010
It won't surprise any longtime reader of my newsletter that I don't trust governments. I would never willingly be a creditor to any government. But even I was surprised by the hijinks now being revealed in the Greek government's budgets.
Get this... Greece didn't count most of its defense spending in its annual budgets because such amounts were state secrets. So almost 30% of its spending didn't officially "count."
Why on Earth would anyone loan to any entity (much less a government) that can't produce accurate financial statements? (By the way, the U.S. can't either. The government's own auditor won't certify the government's budgets.) And why does anyone believe a currency backed by a handful of insolvent governments will survive?
Imagine if you're a German. How much of your savings are you willing to spend on such Greek nonsense each year before you finally dump the euro and start hoarding gold? The euro is pure madness. It's the ultimate expression of a world gone crazy for government debt. In 20 years people will ask, did you ever see a euro?
We wrote it, did you trade it?
If Greece gets bailed out, then the rest of the so-called PIGS (Portugal, Italy, Greece, Spain) will ask to be saved as well. The situation will look like the U.S. last year... with the authorities saving everything in sight. In short, it'll be a replay of what happened here, with the authorities sacrificing the value of the euro to save Europe's financial system.
In 2010, the choices for the euro are 1) extreme weakness in the currency, as you sacrifice the value of the currency by printing money to save the PIGS, or 2) extreme uncertainty. – Steve Sjuggerud, January 2010, True Wealth
Since Steve's issue, the European Union agreed to bail out Greece. And Steve's predictions are coming true. The PIGS are under fire, and the EU will likely print more money to save the foundering countries, too.
In a recent op-ed for the Financial Times, George Soros agreed with Steve. He said the EU's lack of a treasury for solvency issues (it only has a central bank) will eventually doom the euro. He thinks Greece will be fine, but the ensuing bailouts will bring chaos...
Makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large a portion of euroland to be helped in this way. The survival of Greece would still leave the future of the euro in question. Even if it handles the current crisis, what about the next one?
What's the only bullish sign for the euro? It's hard for this many traders to be right at the same time. According to Bloomberg, traders' bearish bets against the euro are at an all-time high. The spread between short-term rates in the euro and dollar is at its highest since September. And large speculators had 59,422 more bets the euro would fall than bets on a gain – the same group was bullish as early as December.
When that many traders are lined up on the same side of the "boat," a countertrend whipsaw is virtually certain.
But as soon as the euro bears get whipsawed... look out. Once the currency cracks, Steve's readers will make a fortune. He's discovered a trade that will return higher multiples than any other way of shorting the euro (and it's as easy as buying a regular stock). In his most recent issue, he said you still have time to buy before the crash.
Also in his latest issue, Steve said his favorite gold indicator is flashing buy, and he's constructed a trade that has returned more than 100% the past four times this signal flashed. To sign up for True Wealth and access these two super-safe trades, click here.
Jeff Clark just booked another huge gain for his Short Report readers. Jeff recently noticed the gold sector was oversold and one of his favorite "buy signals" was flashing. Jeff bought call options on Kinross Gold and closed half the position nine days later for a 92% gain. His readers stopped out of the second half the next day, making an average gain of at least 69% in only 10 days.
That's Jeff's seventh big winner this year. His other trades returned 88%, 93%, 106%, 100%, 73%, and 126%. And he produced these returns for Short Report subscribers in a matter of weeks.
This is one of the hottest streaks we've ever seen for Jeff. It's not too late to take advantage. He recently recommended a new short sale, which he calls "the most favorable short sale setup we'll ever see." And he told readers conditions are setting up right now to "get aggressive" with several more gold trades.
If you're not trading along with Jeff this year, you're missing out on the biggest gains any Stansberry analyst is producing. To sign up for the S&A Short Report, which we're currently offering at a generous discount if you sign up soon, click here.
Date Range:2/18/2010 to 2/25/2010
Date Range:2/18/2010 to 2/25/2010