We’ll soon know whether or not Greece’s parliament accepts the Troika’s draconian austerity terms.
If they are accepted, Greece remains in the euro, for now. But debts will continue to pile up, the economy will suffer and contract more, civil strife will rise and, a few months from now, the crisis will hit full steam again.
And when it does, Greece will have no other option but to leave the euro, reintroduce the drachma, devalue it and kick-start its economy.
But don’t kid yourself. The next shoe to drop in Europe is also lurking right around the corner. Austria recently launched a petition to leave the eurozone. It has garnered over 260,000 signatures.
Italy, too, has a movement that’s gathering strength to leave the euro. So does Cyprus. So does Portugal. The Netherlands, too. So does France, whose popular Front National right-wing party led by Marine Le Pen is gaining clout, calling for France to leave the euro.
Make no mistake: Europe’s sovereign-debt and euro crisis is picking up momentum by the day. A few months from now, I expect all hell to break loose.
There is not one single indebted country in Europe that can pay its bills. And yet, Europe’s leaders, along with the European Central Bank and the International Monetary Fund – the “Troika” – think the solution is to pile on yet more debt.
Pounding the average citizen into the ground with austerity measures and reneged promises that merely serve to shrink an economy.
Where will all this lead to? Where will the crisis spread to next? What are the consequences to your wealth? How can you profit from it?
After all, Europe isn’t the only Western economy drowning in debt and failed economic policies.
Central bank money printing has failed to right the global economy. Instead, deflation is accelerating, the result of as much as $500 trillion in official and “unofficial” government debt and IOUs circling the globe, suffocating the world’s total gross domestic product of roughly $75 trillion.
That’s a global debt-to-GDP ratio of more than 600 percent. Put another way, every working man, woman and child in the world today would have to fork over 100 percent of their income for the next six years to pay that debt off.
That doesn’t even include interest expense, which will surely rise as rates start to climb.
Patently unpayable debts? You bet they are. Debts that have caused entire civilizations to collapse. Absolutely. Think the Roman Empire. Think Byzantium. Think the Spanish Empire, or the British Empire. And more.
This is why I have emphasized deflation in this service. It’s the main macroeconomic force driving the markets today.
That will change – down the road – to inflation, but not until it becomes abundantly clear to the majority of investors that this crisis that is unfolding now is about collapsing governments.
And then you will see a massive stampede back into tangible assets.
Right now, I am still quite satisfied with the recommended open positions.
Gold is still looking very weak. Although there is the potential for a short-term rally, gold is decisively bearish and could just as easily break key support at the $1,150 level at any time.
Hold your shares in DB Gold Double Short ETN (DZZ) with a good-till-canceled protective sell stop at $6.43.
Also hold the December 2015 GLD put options, strike price 110, symbol GLD151218P00110000.
Natural gas is now starting to lift its head, rallying from $2.65 on July 9 to $2.86 yesterday.
Hold your shares in United States Natural Gas Fund ETF (UNG) with a good-till-cancelled protective sell stop at $11.64.
Meanwhile, yesterday’s rally in the stock market was merely a knee-jerk reaction to news on Greece. The Dow has not broken any important overhead resistance levels, neither has the S&P 500.
All indications are that the rally will soon fade, and give way to another leg down.
Hold your shares in Direxion Daily S&P 500 Bear 3X ETF (SPXS) as well as ProShares UltraShort Dow30 (DXD) with good-till-canceled protective sell stops at $15.15 and $19.25, respectively.
Last Thursday you should have been able to exit the DBA July put options, strike price 23, at $0.22 or better. I will soon be looking to re-enter the short side of the grain markets, but wait for my signals.
I am also looking to establish a bearish position on oil, any minute now. So stay tuned.
Lastly, let me remind you:
I have NEVER been more worried about
the storm clouds now gathering on the horizon.
For the first time in nearly 90 years, several of the most destructive cycles in the financial universe are converging.
This is precisely why I have changed the name of Gold and Silver Trader, and it’s also why I will soon be adding a slew of new supercycle profit opportunities to your membership.
It is also why it is absolutely critical that you attend all three of my online briefings next week on Monday, Tuesday and Wednesday (July 20, 21 and 22).
I will give you my forecasts. I will name the investments that I’m convinced will multiply your money many times over as this supercycle courses through the global economy – the very investments I’ll be recommending here in the weeks and months ahead.
Due to your status as a member of my online family, I have taken the liberty of pre-registering you, reserving a seat for you at these briefings.
To attend, simply click this link a few minutes before 2:00 PM Eastern Time (1:00 PM Central, 12:00 Noon Mountain, 11:00 AM Pacific, 18:00 GMT).
Sincerely,
Larry Edelson
Editor, Supercycle Trader
(Formerly, Gold and Silver Trader)
