European Flight Capital To Accelerate. What To Do….

Posted by Larry Edelson - Commodities, Stocks, Technical Analysis

Share on Facebook

Tweet on Twitter


LarryEdelsonHow would you like it if you had, say 500,000 euros in a European bank and …

A. You are earning less than 0.01 percent on your money.

B. Worse, every one of your euros over 100,000 is subject to confiscation should your bank fail.

And if that’s not bad enough …

C. You see your country’s leaders getting ready to enact tax hikes.

D. You see your country’s stock markets starting to tumble.

E. You see the European Central Bank (ECB) getting ready to actively and aggressively devalue your currency. And …

F. You see a very real chance of military conflict in Eastern Europe, threatening your security, your business, and just about everything else you do or own.

How would you feel? What would you do? What would you be planning to do?

The very first thing you’d do is get as much of your money out of Europe as fast as possible.

And indeed, that’s what scores of Europeans are doing. They’re packing up their wealth and shipping out of Europe, in droves.

Most of that money, mind you, is coming to our shores. As I showed you last week, nearly $1 trillion worth of capital flowed into our economy in 2013 alone.

And though specific data on the amount of money coming out of Europe is not yet available, I am certain the majority of it is precisely that, European money stampeding out of Europe and into the United States.

Moreover, it’s a tsunami of European flight capital that is likely to continue and even accelerate. Reasons …

 All three of the euro area’s biggest economies — Germany, France and Italy — are failing.

Germany, the only country preventing Europe from plummeting into an abyss, saw its output decline in the second quarter. Italy, one of the euro areas most indebted countries, saw its GDP decline for the second consecutive quarter.

Overall …

 Europe’s GDP remains 2.4 percent below its 2009 peak, compared to the U.S. where growth has already exceeded that same benchmark. Meanwhile …

 In the 18 countries that use the euro currency, unemployment is stuck at a dismal 11.5 percent. For those younger than 25, the euro-zone’s unemployment rate is a whopping 23.2 percent.

ECBMaking matters worse …

 Inflation in the euro area is running at 0.4 percent — way below the ECB’s target of roughly 2 percent. That’s the official inflation rate. Other stats show most of Europe already caught in a deflationary vortex.

All this is why Mario Draghi, head of the ECB, last week slashed its main benchmark refinancing rate by 10 basis points from 0.15 percent to 0.05 percent — and did the same for its main depository rate, taking it further into negative territory, from -0.1 percent to -0.2 percent.

It’s also why he unveiled an asset purchase program worth as much as one trillion euros, where the ECB will purchase private sector bonds, rather than government bonds.

That in turn is why the euro plunged 1.8 percent last week alone, a huge devaluation, sending the dollar to its highest levels in more than a year.

My view: The euro’s long-term bear market is now accelerating and in the weeks and months ahead, the currency is doomed to plunge all the way back to parity with the U.S. dollar, which would be a whopping plunge of nearly 23 percent in value.

The long-term consequences for the financial markets will be earth-shattering.

As in the 1932 to 1937 period, when Europe also went bankrupt and its currencies plunged in value …

 U.S. stock markets will explode higher yet again, eventually reaching the Dow 31,000 level.

 The U.S. dollar, despite all its problems, will continue to appreciate, ultimately ushering in severe stagflation, or worse, deflation in this country. While at the same time …

 Most commodities will bottom, just as they did in the early 1930s, and head higher as flight capital from Europe also seeks safety in hard and tangible assets.

Make no mistake about it: The greatest threats to your wealth come not from the United States, but from what’s happening to Europe’s economy.

Combined with the rise in the war cycles, which I have repeatedly warned you about that will impact nearly every country and market on the planet …

Everything you thought you knew about protecting and growing your wealth will be turned upside down in the months and years ahead.

Get them wrong, and you will lose, big time. Get them right, and you will win. It’s all up to you.

For now, I recommend …

A. Get any money that you have invested in anything to do with Europe to safety. Go to cash, U.S. dollar cash.

B. Buy into U.S. stock markets, after a correction comes.

C. Continue to accumulate precious metal investments, not going all in at one time.

D. Keep an eye on other commodity markets, especially …

 Crude oil and natural gas, which are forming long-term bottoms now from which they will vault to much higher prices in the months ahead offering you exceptional profit opportunities.

 Agricultural markets, which will also soon bottom.

And above all, stay safe and stay flexible. Follow the money flows. For in the end, it is how money flows that matters the most. Not price-earnings ratios, not corporate earnings, and not even interest rates.

Capital has a mind of its own, and when there is rising geo-political chaos across the globe coupled with 25 percent of the world’s GDP (Europe) going down the tubes …

Capital moves around the globe and from one investment to another in ways that most analysts and economists simply don’t understand.

And don’t forget, you can let me know what you think about this and other topics right here.

Best wishes, as always …


P.S. Don’t miss out on Martin’s new Q&A video that addresses your questions! It was posted just yesterday, click here to view now! You will also be able to catch up on the urgent video briefings that he posted last week.

The post European Flight Capital to Accelerate. What to Do … appeared first on Money and Markets – Financial Advice | Financial Investment Newsletter.

– See more at: