EURO AND GOLD ARE DROPPING (SELL EURO–BUY GOLD)
The Euro, as I stated earlier, is continuing its fall. Gold is also falling. For traders this is an excellent opportunity. In my opinion, the Euro has to go down. The refinancing of sovereign bonds will require higher interest payments. This will weaken the entire EU confederation and brink on a major recession.
In addition, the austerity measures, now in place, will cause more unemployment, reduce retail sales and force governments to fire more people.
This is a self perpetuating formula for failure.
In order to keep the banks afloat, the ECB will have to print more Euros as the Fed has in the U.S. That will be the trigger for inflation within three years.
Gold is dropping because of the perceived economic slow down. How far down it will go is uncertain. But, for gold buyers, this is the beginning of an opportunity to “average-buy” for their portfolio.
One should not make a major purchase, but plan for small purchases on the way down. Eventually, the investment community will realize that inflation is the only solution for the overwhelming European debt. When that realization comes about, gold will return to its former high levels.
In the meantime, stocks will take hits and periodically recover.
One has to realize that funds have no other game to play outside of the stock market.
Hedge funds can short the market, but pension funds and general funds are obligated by their charters to go long. This is why there is a propensity for bull markets.
I think that fund managers will put excess capital into cash. All major U.S. corporations are holding trillions in cash. They do not want to lose their profits by speculating on market gyrations.
The U.S. is making a minimal effort to recover under the two trillion stimulus of the Fed.
Yet, the highways and restaurants are half empty. Unemployment, in spite of the lies put out by the U.S. Government in order to support the Obama administration, is still rising. More and more workers are dropping out of the labor force entirely—too depressed to continue searching for employment.
MIGRATION CONTINUES
Migrants from the Middle East, North Africa and Eastern Europe and even Asia continue to pour into Europe. This is exacerbating the European employment situation.
In the U.S., Latin Americans, Caribbean Natives, Africans and Asians are also crossing the porous southern border with Mexico. They are displacing African Americans who work in the resort industry.
HOUSING IN U.S. CONTINUES TO FALL
Housing continues to fall in the U.S., and new cars are a rarity.
The only industry growing is the home repair industry, as houses, built of cardboard and paste twenty years ago, are now falling apart.
Because of the incredibly poor construction of American homes, the banks are now getting their investments back as part of a wave of
foreclosures. The banks face wholesale repair of dilapidated and unrepairable boxes, insurance costs and taxes.
Many banks are tearing this garbage down, rather than face continuing costs. In certain cities, such as Detroit and Cleveland, entire neighborhoods are being turned back into farmland, rather than permit housing to be used by dope addicts and vagrants.
In these cases, the banks through their control of the local governments, are forcing the taxpayers to pay for their losses.
Another example of the corrupt democracy seen throughout the Western world.
SUMMARY
The Euro is predicted by most Swiss banks to hit $1.20 during 2012. This may happen very quickly.
Gold, which at the moment is dropping with the Euro, should, according to most Swiss bankers drop again, but then rebound above USD 2,OOO per troy ounce.
Traders must make their own decisions on these predictions. One thing is certain in my mind, an economic recovery in Europe or the U.S. is not in the cards.
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