As to Europe’s financial troubles, don’t get caught up in the talk that Europe’s leaders are fixing the massive problem. They are not.
Talk of Eurobonds is conditional upon member countries balancing their budgets, which is not likely to happen. It’s also conditional upon member countries effectively giving up their sovereignty, which is also not likely to happen.
While Europe might be able to buy some time, the European sovereign-debt crisis will not die off until the entire euro region comes crumbling down and the euro breaks up — either via Greece, Spain and/or Italy withdrawing, or perhaps Germany taking the lead and calling it quits on the euro down the road.
Either way, I see more trouble ahead for Europe — a lot more.
And that brings me directly to the markets: They are not in good shape.
Gold is threatening to break critical support at the $1,544 to $1,546 level. It remains under pressure due to fear and panic by investors who want almost nothing but cold, hard cash these days and who don’t want to take much market risk at all.
If gold breaks that $1,544 level, look for gold to plunge much lower.
Ditto for silver, which is on the verge of cratering through the $26 level. If that happens, take it as a leading indicator that both the European Union and the United Sates are plunging deeper into a depression.
I say “depression” and not recession because that’s what it is. Most of Europe is definitely in a depression, with unemployment rates that exceed those seen during the 1930s Great Depression.
Here in the United States, we just don’t know it yet. But all the available evidence that I study tells me that the U.S. economy, when measured in terms of honest money, gold, is already in a depression.
Bottom line: Most asset markets will remain under pressure from …
First, fear and panic that Western economies are melting down, leading to “risk-off” trades and a flight of capital into cold, hard cash.
Second, fear and panic that Western leadership is also heading down the wrong path, mandating and taxing things that really belong in the private sector, and in which the government should not be involved.
Third, fear and panic that there’s almost nowhere to hide your wealth these days, unless you can find another planet to put your money.
And more. I don’t like it one bit at all. But that’s the reality we face now, and will be facing for years to come.
When will it all end? When will there be a better day?
Not for a while. And not until the U.S. wakes up and smells the coffee and realizes it will not be immune to a sovereign-debt crisis and that our leaders are also embarking down the wrong path, trying to socially engineer a solution through tax-and-spend measures, through class warfare, and more.
There is a light at the end of the tunnel; however, it’s a few years off. In the meantime, I maintain my views …
1. Keep most of your liquid funds in cash, ready to be deployed on a moment’s notice, but as safe as can be right now. The best way: A short-term Treasury-only fund in the U.S., or equivalent.
2. Hold on to all long-term gold holdings. You do not want to let go of those. Short term, gold is heading lower. Long term, it’s heading to well over $5,000 an ounce.
3. Consider prudent speculative positions to grow your wealth. Like those I have recommended in myReal Wealth Report, which are doing great right now as silver falls, as the euro struggles, and more.
Most importantly, question everything Washington tells you. Only by doing that will you ever come away with an objective view of what’s really going on in our country. Ditto for Europe and its leaders.
Stay tuned and best wishes,
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