**[investwise]** Sean Brodrick: Make A Beginning; Buy Gold

 

The euro bellyflopped last week to close at a fresh four-year low. Hungary's currency fell on its face as that country became the next to join the PIIGS (Portugal, Ireland, Italy, Greece and Spain) in the economic slaughterhouse.  The British pound is getting crushed by bad debt. But one currency in Europe is doing very well: Gold!         For years, the euro and gold moved in sync, opposite the U.S. dollar. But that's all changed in the past few months. Now, the euro is plunging and gold is soaring.   That's because investors are lining up on the steps of the Athens stock exchange to convert their euro assets to gold at a huge premium. And nervous Germans are buying so many gold kruggerands that South Africa's mint has shifted into overdrive. Around Europe, gold fever is spreading. We're seeing two astounding things in the currency markets right now ...   First, the euro is falling at a speed that is unprecedented in modern times for a major currency. The euro is now failing miserably. Why? Because Europe's financial crisis has metastasized into a sovereign debt crisis and finally a full-blown crisis of confidence.   Second, gold is reasserting its traditional role as a currency. In fact, more and more people across Europe are realizing that gold is more of a real currency that the paper "funny money" their governments are passing off.   Coming next: The euro, which closed below $1.20 on Friday is AT LEAST going to parity with the U.S. dollar in the next 4 to 5 months. Longer-term, there is mounting evidence that the euro may not even survive. In fact, it may not last out the year!   This rush out of the euro is helping the U.S. dollar along with gold (and silver). But Americans shouldn't be smug. There is a Tsunami of Trouble rolling across the Atlantic, about to smash into our financial shores.   U.S. government debt is just as bad — or worse — as European government debt   Total U.S. government debt recently passed $13 TRILLION! There are many U.S. states in worse financial shape than Greece. Heck, some U.S. states, including my native Florida, have to borrow money from Uncle Sam just to pay unemployment insurance.   One of the things supporting the U.S. dollar is that international investors think we can still grow our way out of this mess. But with a double-dip recession around the corner, that seems unlikely.   When the mass herd of investors clue in, the U.S. dollar will be in for a world of hurt. And gold? Stand back and watch the blast-off! My next target on gold is $1,450 an ounce, and beyond that I expect it to go to $2,300. And it could go a lot higher than that!   So now — RIGHT NOW — you need to protect yourself against the potential Gulf-of-Mexico-sized tragedy facing the euro. And let me tell you three easy ways to do that.   #1) Double-short the euro. The Market Vectors Double Short Euro (DRR)  moves roughly 200% the inverse of the value of the euro.   #2) Double-short euro stocks. The ProShares UltraShort MSCI Europe(EPV) tracks roughly 200% the inverse of a basket of leading European stocks. The crisis in the euro itself won't do European stocks any favors in the short-term. You can use the EPV to make the most of it.   "Ultra" funds that move 200% of what they track are for short-term trades only, and you can get burned. Be sure you know where you're going to get out before you buy. If you're a more conservative investor, consider my third recommendation ...   #3) Go long gold. I think everyone should be buying gold bullion bars and coins. You don't have to go crazy — wait for a pullback, because nothing travels in a straight line. But if you start making a monthly allocation into gold (and its less-glamorous step-sister, silver), I think you'll be very glad you did down the road.   After all ... gold is going up now when the U.S. dollar is going up. Since gold is priced in dollars, imagine how high and fast gold will move! And if the dollar stays strong — unlikely, but anything can happen — gold is still a good place to put your money. As it reasserts its status as an international currency, the outlook for gold looks brighter and brighter.   And if you want to buy some insurance for your portfolio, allocate some of your investment funds into one of the exchange-traded funds that hold physical gold. The SPDR Gold Trust (GLD) is the biggest and more popular, and has added more than 11% to its physical gold holdings since the beginning of May. There are other choices in gold ETFs as well.   Buying gold would be a good start.   Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.   Nothing in this article is, or should be construed as, investment advice.

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