U.S. Dollar Offers Huge Trading Opportunity
The Dynamic Wealth Report
October 6, 2008
How To Profit In A Global Recession
I don’t know about you, but I don’t think were done yet. If you watch
the talking heads on TV it seems the US Government is riding in on a
white horse to save the economy. It sounds like the bank rescue package
– all $700 Billion of it – will save the day. I’m certain it’ll help a
little. But what if it doesn’t? What if this is just the beginning of
something much bigger?
Let me explain.
Right now credit markets are seizing up. You don’t need me to tell you
this. Just open any major newspaper in the country. Over the last 2
weeks they’ve done nothing but report on the dire situation companies
and individuals are facing.
The best example is recent spikes in LIBOR rates.
LIBOR is the rate that banks charge each other to borrow money. The cost
of borrowing money spiked up because banks are desperate for financing. But there’s a problem.
Many banks are looking at other institutions with
a suspicious eye.
They don’t know who’s going to survive the week, let alone the night.
If you run a bank, you know being able to borrow money is central to
your business. What’s happening is just like the great depression. Banks
will stop lending to each other. More banks will fail, and that will
cause lending to tighten even more.
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It’s a vicious cycle.
These banking problems are starting to spread all over the world. Right
now Europe is witnessing the greatest collapse of their financial system
in the last century.
Remember Northern Rock? The Bank of England was forced to nationalize
that institution after it experienced a run on the bank. Recently
Ireland did something unprecedented. Irish citizens were questioning the
stability of their banks. As a result, massive withdrawals started.
This pushed several Irish banks perilously close to failure.
So the government responded in the only way it could. They guaranteed all
of the deposits at the nation’s banks. Some estimates place that
commitment at close to $300 billion dollars. Then Greece did the same
thing. Amazingly, Germany – one of the most influential economies in all
of Europe followed suit.
Just last week a handful of European banks needed to be bailed out. Let
me tell you, I think it’s just the start. This is like watching dominos
fall. One knocking over the next, then the next, then the next. Nobody
knows where it’s going to end.
On a global basis investors are hoarding money.
How do I know this? The US dollar is considered the safest currency in
the world. It is, after all, tied to the world’s largest economy. So
when fear strikes, global investors move into safe currencies like the
US Dollar. Global investors start hoarding the US dollar . . . and
that’s what’s going on now.
This global movement to the US Dollar is happening despite horrible US
economic data.
Bad economic data should scare away investors. But it’s not. Investors
are buying the US Dollar in huge quantities and hoarding it. Safety is
the key issue. Because of this the US Dollar continues to climb.
How long will this last?
To be honest, I don’t know. But I’ll say this. It’s a strong trend that
could go on for quite a while – and longer if we enter a global
recession. It’s definitely something we can profit from. I’ve been
telling my subscribers to the
Currency Options
Insider to go long the US Dollar. We’ve posted some amazing trades . . .
one trade showed gains of more than 1,000% on the strength of the US
Dollar.
You can also profit from the move in the US Dollar by purchasing
PowerShares DB US Dollar Index Bullish (UUP). It’s an ETF that buys a
basket of US Dollar futures contracts. As the value of the US Dollar
rises so to should this ETF. Consider adding some to your portfolio as
an easy way to profit from a global recession.
• Electricity (up 3%)
I like to highlight an industry that’s rocketing higher. The biggest
performer in the last 30 days has been the Electrical Industry – up a
whopping 3%. Believe it or not, investors are flocking to this industry
because of their stability and strong dividends.
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