All eyes are on Greece …

GST Issue #222

As you well know, right now all eyes are on Greece. Will it default now? Or will it somehow reach an 11^th hour deal with the ECB and the IMF?

No one can tell you with any certainty. But I can tell you this: Even if a last minute deal is reached, Greece will hit another crisis in mid-July, when it has to make billions more in debt payments.

As a result, it’s inevitable Greece will default. The only question is when? This week? Mid-July? Or September, when it has still more payments due?

Frankly, defaulting would be the best option, and the sooner the country defaults, the better for its people.

Yes, there will be short-term pain for the Greeks. But the country could reintroduce the drachma, devalue it, and soon thereafter the country will be soaring with economic growth.

As to the impact on the markets, it’s almost impossible to say in the short-term. There is sure to be wild swings when Greece defaults.

But as to the intermediate- and long-term trends, it matters little. Greece’s default will merely be the beginning of a string of defaults in Europe that will eventually cause the European Union to fail, and with it, the euro.

That will be very bullish for gold and most commodities, later in this crisis.

But right now, gold still remains on track for a low later this month.

In fact, gold is now about to give up the ghost on its recent bounce noted in the chart.

It’s acting weak, and once it breaks the $1,164 level, gold should move swiftly lower.

Note that if the projection remains on course, gold should make a low later this month, around June 24, then rally into late September, then plunge to another low around November 13.

If all goes well, we may then have a FINAL bottom in place.

If, on the other hand, gold somehow stages a cycle inversion and rallies into June 24, then the slide into November will be all that more brutal. I do not expect a cycle inversion at this time.

Bottom line: Hold all gold positions, including the GLD options, and the related stops on your inverse ETFs. I will make a decision in the next few days as to rolling the July GLD puts forward, and what strike and month to use.

Now, to other market action: Stocks are still in a roll-over phase, to the downside. Stocks should also move lower into later June, then bounce, then move even lower into October. Hold your inverse equity index ETFs with your protective stops in place.

Agricultural markets are bouncing like gold and silver right now, but overall my models project the same price course over the next few weeks: Lower. Hold your DBA put options.

Natural gas is floundering a bit, but bullish overall.

Hold all positions and related stops and stay tuned!

Best wishes,

Larry