Almost every market was up significantly last Friday (June 29). I looked over a few market commentaries and across the board of main stream commentators they rationalized the record breaking day today to the EuroZone finally finding a solution to its ongoing problem of collapse. So I have to ask myself, Does this rational make any sense? The answer I came up with is a resounding NO.
In recent days and weeks the dollar has been going up as the banks and investors in the EuroZone were looking for a safer haven for their money in the event the Euro took a dump. That is logical. Even though the dollar has its own major problems, it was seen by investors as being safer than the Euro at the time. Today the dollar as well as US government bonds took a huge hit as investors rushed to pull their money out of the dollar and park it in what they considered safe as they had done before. Money will always rush to where it perceives safety. So where did the money rush to today? Back into the Euro now that they claim the problem with it is finally fixed once and for all? The answer is NO.
The money that was pulled out of the dollar and US government bonds today went rushing into commodities. Not just any commodity but virtually any and all commodities. It appeared to be a panic move which said lets get out of all currency markets and park our money in something tangible and real regardless of what it is. But if the EuroZone problem is fixed finally as claimed, why this sudden panic rush out of currencies into commodities?
The answer to that question is easy to see when one looks at the description of the EuroZone so called solution. It amounts to nothing more than unlimited printing of currency which is pumped directly into failing and failed EuroZone banks to keep them afloat and give them the appearance of being solid. Nothing with any substance was solved with regard to the Euro. The only thing this latest action will do is to delay the ultimate collapse a few more weeks or months and it will make the eventual fall that much more painful. Smart money knows this so on a day the average guy on the street might expect money to begin to flood back into the EuroZone currency again it saw through the facade and fled instead to the only thing left with any safety … commodities. What is worth noting is that the dollar and US bond market took a huge hit today … smart money knows the game is over with the Euro and the US federal reserve has pledged its full support to the Euro bailout … so the Euro and dollar are in this together now and when the Euro falls so to the dollar, hence the fleeing away from all currency today into tangibles by smart money.
Take heed … this Euro problem is NOT solved, regardless of what the main stream media reports and it can go at any time and when it goes so goes the dollar. Take a lesson from the smart money and get your currency out of paper as much as you can and into hard assets that you can use such as food, water, emergency supplies, gold, sliver and things to use in bartering after the collapse of the world currency market.
July 2, 2012