Three Months Ahead: A Money & Crisis Report Forecast
Last week, I reviewed the investment ideas published in Money & Crisis over the last two months.
As a brief recap, we recommended:
- Investing in the Long-Term treasury ETF (TLT) to profit from an economic slowdown.
- Trading the UltraShort S&P 500 (SDS) based on the Fed disappointing investors in its late July meeting.
- Buying gold based on the next round of monetary easing from central banks.
I’m very pleased to say that all of these investments have risen dramatically since we recommended them.
With that in mind, I’d like to look ahead to the next 90 days in the markets.
Forecast #1: Gold Will Correct
First and foremost, gold will correct – possibly by a lot.
Long-term gold will prove to be a great investment based on central banks easing monetary conditions. But right now, the precious metal has come too far too fast.
My final upside target for this move is in $1,570 or so (blue line in the chart below). At that point, I believe we’ll see gold begin to correct back to $1,400 if not more.
Forecast #2: Short- to Intermediate-Term Bond Yields Will Rise
Treasury bond yields have fallen aggressively on fears of a global slowdown.
This move, like the move in gold, is overdone. The yield on the 10-Year U.S. Treasury has hit support around 1.5% (red line in the chart below). I expect we’ll see a bounce here on “good news” of some sort.
This will mean bond prices falling, bond yields rising. And a general “risk on” environment for anything priced based on bond yields.
Mind you, I’m singling out U.S. Treasuries here, but I expect German bonds and others to fall even MORE in value than Treasuries.
Forecast #3: U.S. Stocks to Correct to the 2,700s, then Bounce Hard
The stock market is following the long-term chart I showed clients back in June to perfection.
Stocks hit the upper trend line (top blue line in the chart below) and have since reversed. They’re now falling to test critical support (red line). I expect we’ll see a sizable bounce there, likely based on bond yields rallying (see forecast #2).
How to Profit When Currencies are Used as Weapons
The one caveat to all of this is if the currency wars get nasty.
The world is increasingly fragmented with each economy/region looking out for itself. Meaning, central banks are about to begin a war of competitive devaluation – devaluing their own currencies in an effort to gain a competitive advantage against their trading partners.
Just last week, the European Central Bank promised it was preparing a MASSIVE monetary program for its September meeting. This would force the Euro sharply lower.
At the same time, China is talking about devaluing the Yuan aggressively.
And then there’s the U.S., where there are rumors the Fed might surprise the markets with a MASSIVE 0.75% rate cut in September. This would force the U.S. dollar to collapse.
For most people this kind of stuff is scary. For subscribers of my currency trading system Alpha Currency Profits, it’s EXCITING!
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Since its creation, Alpha Currency Profits has shown returns of 52% in two days, 75% in five days, 79% in four days, and even 100% in just four days.
And mind you, those are just the gains we’ve seen since early JUNE!
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