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Graham Summers Free Weekly Market Forecast (Euro Reversal Edition)
Well, the
Euro hit my target to a “T” at 137.5 last week. Indeed, the European currency just poked its head above this line
before falling back below it again. Having gone nowhere but up since early
January, this move represents not only the Euro’s first correction of any real
size, but ALSO a reversal week: a week in which a security hits a new high
before falling.
This
reversal is even more noticeable on the weekly chart, though the correction is
not a sharp one… yet.
Indeed, if
this correction picks up speed, it will trigger the developing Head and
Shoulders pattern I’ve been noting for several weeks. As readers well know, I
believe the Euro will no longer exist in its current form within a year.
On that note
it’s worth considering that should
this H&S pattern be confirmed, the downside target is 118: the exact low
from the June ’10 collapse. However, I think we’ll be breaking even this line
and seeing the Euro at new lows below 118 before we get through the first half
of 2011.
This would
result in the US Dollar staging a sizable rally, not because the US’s financial
position somehow improved, but simply because the Euro accounts for over 50% of
the US Dollar index. So any collapse in the European currency will push the US
Dollar higher.
This in turn
would hurt the commodities space, which continues to move as anti-inflation
hedges. However, I want to be clear here. I would not view a rally in the US
Dollar as negating my forecast for massive inflation, if not hyperinflation
within the next two years.
Indeed,
we’ve already seen asset prices explode higher WITHOUT the Dollar falling.
These gains
occurred at a time when the US Dollar didn’t fall a CENT. So the idea that you
need the US Dollar to collapse in order for inflation to hit is a lie. However,
at some point, the Euro collapse will end. I cannot say when, but at some point
the political pressure on politicians (nearly 60% of Germans want out of the
Euro), combined with a currency collapse will result in the European union
changing, possibly splitting into two regions or even being done away with
entirely.
When this
happens, the attention will shift to the US Dollar.
Consider the
US’s financial position. Our entire financial system is held up by blatant
fraud. The banks don’t have anything even resembling accurate accounting. Our
former Treasury Secretary and Chairman of the Federal Reserve BROKE THE LAW
multiple times and have yet to face any consequences. Corruption, fraud, and
even front running are the NORM in the US markets.
On top of
this, the US $14+ trillion. And if you include unfunded liabilities like social
security and medicare, you're talking about $70+ TRILLION in total debt on the
US's balance sheet.
Let's be blunt here: the US will NEVER pay these debts and liabilities off. And
once the financial world finishes pummeling the Euro, we're going to see the US
Dollar and Federal debt markets implode.
I cannot tell you when this will happen. All I can say is that it will
happen. And when it does, inflation hedges across the board will EXPLODE
higher.
Some, like the most popular picks (Gold an Silver bullion) will records good
gains. However, others which 99.9% of the investment world are currently clueless
about, will go absolutely parabolic.
Buy them
now, while you still can.
Graham
Summers
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you’ve yet to take steps to prepare your portfolio for the coming inflationary
disaster, our FREE Special Report, The
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Fed is powerless to stop it, and three investments that absolutely EXPLODE as a
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The degree of political support behind the euro is immense . However it's getting exaggerated and hyberbolic . A few days ago Merkel was going on about how the euro was the unifying force in Europe and that peace on the continent depended on it ( or that it had established peace , I can't remember which ) . Made me cringe .
Europe is not an optimal currency zone ; it never was and for the forseeable future never will be . Peace was brought about long before the implementation of a monetary union and will last regardless of whether that union fragments . I'm getiing tired of the shrill cheerleading from EU officials .
As for EUR/USD , I think we head lower from here . I'm short EUR/CAD , which is pretty much trading as a EUR/USD proxy at the moment .
Collapse? Strong language to get the crowd hyped? The eu was .85 five years ago. please explain if it returns to that number things are catastrophic.
"I believe the Euro will no longer exist in its current form within a year. "
Always the same refrain. This guys still do not understand the political aspect behind the euro.
I think you are right. I put on a bet last fall that Euro would not exist by Jan 2012 but I am going to lose. At Davos it was pretty clear that despite the problem of having a currency union without a fiscal union, Germany and France are totally committed to the euro and will "do what it takes". It's not going to be pretty but the euro will survive for at least several years.
first off think your bet was quite a good one but like all market predictions, it's all about timing. I can usually call a trend but usually fuk up calling it too early which is what you've done even if your call is right. But hey a year if not a week is a long time in politics. The top Irish party, the most successful in Europe for the past 45 years, has gone from hero to zero in a matter of 1 year. Egypt seemed to explode from left field. You never know, if Belgium, Portugal and Spain are too big to bailout in the next 6 months! Lastly who are your bookies, I'd like to place a bet or two on something similar to this?
Personal bet with a well known economist, as well as trying to replicate it in the FX & derivatives markets. The vig is smaller
N.B. got my first one-digit Captcha ever
Looking at any other currency pair is pointless. AUD/USD is where it's at.
You mean after it hits 1.0604?
Both currencies will experience DEATH by Inflation, only no one knows which first! All other noise is pure speculation with no merit, we don't know how much longer the FEDs and their friends can/will keep printing fresh manure so..we don't really know when this house of cards will fall apart, we just know IT WILL! There are no subscriptions needed for this FACT!
+1
am still hoping/waiting for Euro to bounce to $1.39 again before it dives... fingers crossed!
Keep dreaming, yo!
There it is again , that word used here ' absolutely parabolic '
Not helpful.
When this happens the smart money jumps ship and it goes parabolic down....
i know this is different in many ways but i had a tech stock in 2000, i bought for 2 cents/share , it went to 25c and i was out of the country and found it had gone parabolic (whoopee-fuckin-do) while i was on holiday and was now back to 4c when i got back.
i hung on - as a schmuck does - and sold them for 1c - a 50% loss.
Remember to sell high folks - its a jungle out there and those banksters are squatting in the bush... getting stronger.
Duke, there is a way to play the bankers game financially and make money consistently parabolas or not.
https://www.gracelandupdates.com/
It looks the focus has already shifted to dollar.
I bet the dollar will die first :D
If it hit your target to a T, how come you went short a few weeks back?
Nice, great analysis. I'll make sure to keep an eye on this, thank you!