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« Game Theory Reveals Terrible Strategic Thinking in Euroland | Main | Argentina Rule Change casts a dark shadow over the mining industry »

The Devil is in the detail of the one trillion Euro deal

Euphoria hit the financial markets as the news was announced of a one trillion euro bailout package. The large European banks jumped by as much as 20% in a single day increasing their market caps by billions. This burst of excitement followed through to the United States where the DOW leaped forward as the banking sector lead the way to higher ground.

This deal supposedly ring fences the bankrupt sovereign nations inside the euro zone and protects them any further defaults.

Here is a quote from the European Council President, Herman Van Rompuy

the euro zone has built a "sufficient firewall against contagion, thanks to an agreement to multiply up to fivefold the firepower of the European Financial Stability Facility rescue fund. The leverage could be around EUR1 trillion under certain assumptions," Van Rompuy said.

Herman van Rompuy

Before you get all excited, this is a quote from a man who went to school, then university and then into civil service, he has no private sector experience whatsoever. And hes the President! No need to worry then.


The act of adding more debt to those who can't support their current debt load is lunacy.

Question 1: Where is the collateral for all these the euros?

Question 2: Who is picking up the tab?

Answer: The same people who are struggling now, the southern end of this European club is sinking and the economies of the northern end are slowing, so how are they going to come up with the cash.

Bernie Madoff would be proud of this move, its a Ponzi scheme that will engulf the whole world, inflicted on us by a bunch public sector twits who should never have been trusted with such as important task in the first place.

Bernie Madoff

Mark my words, give this a few weeks and we will see the gloom return when the investment community realizes that the cookie jar is well and truly empty and this party is approaching its eventual catastrophic close.

So what does this all mean to us. In a nutshell its money printing, leading to inflation and then onto hyperinflation. The euro is having a day in the sun at the expense of the US dollar which fell dramatically on this news to around 75.7 on the US Dollar Index. It is now an accepted fact that individual countries are following a policy of actively driving their currencies down in order to gain an advantage for their own exporters. Weaker currencies are being welcomed and they will continue to get weaker as we inflate the money supply.

To protect ourselves we need to loosen our grip on paper money and look to hard assets, something that you perceive is a store of value. We made our choice some years back when we decided to acquire both gold and silver, the associated stocks and of late we have looked to the options market, in an attempt to derive some leverage from the rise of both gold and silver.

So far it has worked out well for us, so it is a formula that we intend to stick with until the investment environment changes, which we don’t see happening any time soon.

Gold an silver have both reacted well to this latest move emanating from Pantomime Europe. During the last five or six trading sessions gold has risen from the $1600/0z level to close today at $1744.50/oz and silver has risen from the $30.00/oz level to close today at $35.37/oz.

Our projections for gold to trade at $2000/oz this year have taken a battering, but the year isn’t over yet, so don’t be surprised to see gold prices hit this target and whatever you do, hang on to it regardless of the buffeting that we are going through.

Volatility on steroids is the order of the day and we will have to endure wild swings in both directions as the bulls and bears strengthen their resolve and pursue their targets with even more gusto.

All of our financial futures are at stake here, so it is our responsibility to take time out and make provision for what we see coming down the line. Its not pretty and we can only do our best in terms of protecting ourselves, so we wish you well with your survival plans.

Keep your chin up and have a good one.

Regarding We currently have a number of open trades at the moment however, we do not update the charts until the trade is closed and the cash is back in our account. 

Our model portfolio is up 407.38% since inception

An annualized return of 113.83%

Average return per trade of 42.43%

86 closed trades, 83 closed at a profit

Average trade open for 45.85 days



So, the question is: Are you going to make the decision to join us today.

Stay on your toes and have a good one.

Also many thanks to those of you who have already joined us and for the very kind words  that you sent us regarding the service so far, we hope that we can continue to put a smile on your faces.

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Reader Comments (2)

Wait a minute. Where are the bars on van Rompuy's cell?

Oh, that's right. His is a crime in progress...for which he will never be prosecuted.

This guy would be the most laughable buffoon if he hadn't been invested with so much power.

Farce becomes tragedy...which isn't nearly as entertaining, I must say.

October 30, 2011 | Unregistered Commenterfallingman

I just don't understand where this money is coming from yet, if they are going to print it, then gold and silver will rocket.

October 30, 2011 | Registered CommenterGold Prices

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