All eyes are still on Greece. The country has already defaulted on payment due Tuesday. Now, all that remains is the referendum on Sunday.
Will Greek citizens tell the “troika” – the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) – to take a hike on their authoritarian policies that put bondholders above the interests of the people?
Or, will Greece decide to accept the troika’s harsh authoritarian terms to stay in the euro?
Frankly, whether Greece decides to stay in or not come Sunday matters little. For in the end, for Greece to survive it must leave the euro, take back the drachma and kick start its economy.
The only question then becomes whether it happens this Sunday, or at some later date.
I can’t tell you which way the vote will go on Sunday. But I can tell you that …
A. As I just said, Greece WILL leave the euro. The only question is when. And …
B. Greece is merely the beginning of a great sovereign-debt crisis, one that will cascade through Europe … then move on to Japan … and then finally, to the last Western economy standing, the United States.
The timing of all this, I’ve spelled out for you before. The crisis has already started. Come October, it will accelerate. It will last all the way through until late 2020, a full five years …
And it will turn everything you thought you knew about the world – about economics, about markets, about society – inside out and upside down.
For now, focus on the fact that gold is falling. Why? Because in the beginning of a sovereign-debt crisis, the forces are deflationary in nature and cash becomes king.
That even applies to the Greek government. The Greek central bank holds 112.5 tons of gold, worth 3.8 billion euros at current market prices, or roughly $4.2 billion.
Do you think the Greek central bank won’t sell its gold reserves? It may have no choice. Whether the country stays in the euro or not.
Moreover, we may see the Greek government call upon its citizens to contribute their gold to aid the country …
Just like South Korea’s government did during the 1998 Asian financial crisis, where the country’s citizens sold as much as $200 million of gold to raise funds for the country.
All this is precisely why gold is acting so weak, and is now trading below important support at the $1,164 level.
Nevertheless, with a long weekend coming up and an uncertain Sunday for Greece and Europe, I believe now is a great time to make the following two moves …
A. Grab up to 48.3 percent gains on DUST.
B. Roll forward the July GLD put options with a strike price of 114, to the December GLD puts, strike price 110, symbol GLD151218P00110000.
You will take the proceeds from the sale of the July puts, and reinvest them in December puts with a lower strike price. This will give you plenty of time to capitalize on a late November low in gold, which should come in well below $1,000.
Hold all other positions and related stops.
Now, please act on the following recommendations as soon as possible …
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If you own shares in DUST … 1. SELL ALL of your shares in Direxion Daily Gold Miners Bear 3x ETF, symbol DUST, at $19.20 or better, good till canceled. If and when filled, cancel your protective sell stop at $10.54. If you own the July GLD put options, strike price 114, symbol GLD150717P00114000 … 2. SELL ALL of your SPDR Gold Shares Jul-15 put options, strike price 114, symbol GLD150717P00114000, at the market, TO CLOSE. And … 3. BUY 4 December SPDR Gold Shares put options, strike price 110, symbol GLD151218P00110000, at $4.00 or better, to open, good till canceled. |
Best wishes and have a great holiday weekend …
Larry
