As a CFP and CIMA, I’ve watched as Wall Street guys vie for your retirement plan for years.

Like snake-oil salesman on crack, they peddled their wares on unsuspecting, hard-working Americans. Naturally they wanted their clients to buy the investments that would hand them the most fees.

So these smooth talkers pushed the most boring U.S. blue-chips, the “safest” (read: lowest yielding) bonds, and recommended the “tried and true” mutual funds that had seen their heyday years prior for all retirement plans. (Not even currencies or commodities were on the menu.) It was textbook rear-view mirror investing.

For the most part they got away with it – that is until the credit market crashed in 2008, and everyone learned how fickle those stocks and mutual funds were.

Yes, it was disgusting to watch.

But as annoying as this Wall Street pandering was, it’s nothing compared to what Washington is trying to do to your retirement plans right now.

In short, they want to govern your retirement plans with the same arrogance and stupidity that made us the world’s biggest financial deadbeats in the first place. More on that in a moment. First let me set the scene for you…

Uncle Sam Needs Another Sugar Daddy

The guys in Washington are getting desperate.

For years, our government has relied on the major Asian players like China and Japan to finance our debt. I’m sure you’ve heard this story. We bought their stuff, and they bought our Treasuries and other U.S. paper.

This system worked out great for us.

We spent like teenagers with our Daddy’s credit card, and then foreign investors essentially picked up the bill. All we had to do was offer them to pay them back at some later date (and honestly, with the world’s reserve currency – we could afford to print whatever we owe them in the future).

But some funny things happened as politicians wallowed in their own brilliance for arranging this deal…

Financial Losers Scream “Hey! Buy Our Debt!”

First, we quickly became the biggest financial losers on earth.

As of yesterday, our debt stands at $12.5 trillion. It’s estimated our country-wide debt will climb to $14 trillion by the end of this year. So complacency happened – we became used to the idea of being in debt.

Then, 2008 happened. Subprime happened. The credit crunch happened. Worldwide recession happened. And now trillions of dollars in bailouts later…

Suddenly the U.S. issues Treasuries like crazy to pay for all that debt. Many of my colleagues are calling this massive Treasury issuance the biggest financial bubble of all time – very close to popping.

But there’s another phase to this Treasury Bubble. Right now, we’re in danger of losing our best customers who pay for all that debt. China and Japan have already started scaling back their Treasury purchases – at the worst possible time.

In February, the “tepid” 30-year Treasury auction was so bad that the Federal Reserve had to dive in to the market and buy up the long-dated Treasuries that didn’t sell.

In short, they need Treasury buyers. So the guys in Washington are turning to you..and your cash-rich retirement plan to buy up those unwanted Treasuries.

The Logistics of the Greatest Government Theft in Years

Now I need to give a caveat: This is NOT happening yet. But the proposals themselves are scary enough.

The Department of Labor and U.S, Treasury Department are looking into ways to promote the conversion of retirement plans into an “annuity payment.” You can read about that in sources like Business Week and Bloomberg.

But here’s what you need to know: An “annuity payment” is really government speak for forcing you to buy U.S. Treasuries with your retirement plans.

And most likely, the government wants to lock you into those low-yielding 30-year Treasuries that foreign investors no longer want. That way, they can finance a mountain of deficits for decades to come.

This isn’t the only government move to force the purchase of Treasuries. They also announced recently that money market accounts will soon have to hold 10% of their assets in Treasuries or equivalents.

Imagine that, 100% of your retirement tied to the dollar, a declining asset and backed by a practically worthless government IOU. It’s the last asset you’d want to own for your retirement.

What’s more, the timing coincides with the beginning of the retirement of the Baby Boomers. This could create economic strains to an entire generation if they’re limited to such low-yielding investments.

Also, remember the Treasury Bubble? If the government forces you to hold Treasuries in both retirement plans and money market accounts, you can bet the ranch that this bubble will just to continue to swell to the breaking point.

Defend Yourself Now!

Right now, it’s 100% legal to pick up your retirement plan and move it outside the United States.

In my opinion, that’s the best plan of action to defend yourself against this attack on your retirement plans because if Uncle Sam does go forward with this plan, chances are you will be exempt if your plan is already set up offshore.

But if you’re not interested in the offshore option, keep in mind that you can help hedge against these moves by investing some of your other assets outside the U.S. dollar.

One of the easiest ways to do that is by buying foreign currencies and precious metals. Specifically I like commodity-backed currencies above all – currencies like the Australian dollar and Canadian dollar.

You can also short U.S. Treasuries. (All this U.S. paper is likely to drop in price as the government forces you to buy them wholesale.) The only way you can short treasuries in a retirement plan is through a short ETF or mutual fund.

But whatever you do, don’t let yourself be a victim to all this. You can’t afford to be complacent when the government talks about using your life savings to pay their bills.

Best Regards,
Larry Grossman, CFP®, CIMA®
www.offshoreira.com
lgrossman@offshoreira.com
727-784-4841

About the Author: Today’s guest writer, Larry Grossman is the world’s leading expert on liberating your retirement offshore. A CFP and CIMA, he has spent the last two decades creating customized retirement plans for high net worth individuals. For more details on how to liberate your retirement plan, please see our latest special report.

While I was dining there with all of the movers and shakers in Palm Beach, someone let it slip that I’m a Forex trader.

Suddenly the entire table wanted to know “how I find the really big trends” coming in foreign currencies. Well, I could only describe so much at the table (after all I was eating lunch at the time).

Also, I’d rather save those tips for you. So let’s jump right in to this.

Let the SMA Point the Way to More Winning Trades

FIRST, you want to see what the daily chart has to say.

Look at a daily chart going back one year in time and put a 50 period simple moving average (SMA) on it. This tells you the direction of the trend. You can see this on the GBP/JPY daily chart below.

The 50 period SMA Gives You Clear Direction – DOWN!

So you can see that earlier on in the year, the trend was up (as emphasized by the green line). However, later on, the pair started to trend downward as the 50 period SMA turned downward (emphasized by the red line).

This shows us that the present trend in GBP/JPY is going down. So you will have a higher probability trades looking for “short sells” as opposed to buys.

With the daily trend as our frame of reference, we can slip down to the 4 hour chart and look for entry signals.

To devise a simple “trigger system,” for when to buy and sell, you can place a 20 and 50 period SMA on that chart. These will hug more closely to the price action and give us signals that change with the trend more rapidly.

Check it out below.

Grab Gains with the 20 SMA / 50 SMA Crossover

Sell signals come when the short moving average (the black 20 SMA) crosses below the purple 50 SMA. We want to favor sell entries over buy entries since the daily chart’s trend was down as shown by the 50 period SMA.

So the daily chart’s moving average gives you your trading bias. The 4-hour chart gives you the entry signal into the direction of that trend.

With this trend signaling system, you now know the direction of the trend AND how and when to enter into the trend. From there, periodically move your stop down as the trade progresses and that will allow you to lock in more profit as you allow your profits to run.

Putting It All Together…

One final thought…

Flip through the daily charts of all pairs with the 50-period SMA on it and find the trend that is the clearest to you. You don’t have to have a “read” on all of them. You just need one good trade at a time.

So pick the best-looking chart that you have the most confidence in.

Then drill down to the 4-hour chart and patiently await the next signal which has the ability to fatten your account. And whatever you do, DON”T trade too many lots.

When in doubt, trade one mini lot per $5,000 in your account. Traders never mess up by under-levering their accounts but they commonly mess up by over-leveraging their accounts.
In short, look at the charts, go with the trends, and trade fewer lots. Do that, and you will significantly increase your chances of success.

Happy Trading!

Sean Hyman, aka Professor FX

Last December, I mentioned here in FX University that 2010 would be the year for volatility. I explained why the markets would zig and zag this year, as the impacts from these desperate government bailouts reached the markets.

So far, we have not been disappointed.

Now more than ever, I can see that while the 2008 financial crisis may be over, we will still feel its effects for years to come.

One important development is already taking shape: investors are becoming more and more concerned about country risk.

Country risk is the fear that a country could face some sort of crisis – the black swan event that can destroy a country’s reputation and damage its stock, bond markets or currency.

This year, country risks are already emerging all over the world.

Here’s the good news: As a Forex trader, you can actually use these risks to your advantage. I’ll explain how to do that in a moment. First, let’s take a look at how these risks are erupting around the world…

Back in a Simpler Time Before We Cared About This…

Five years ago, nobody worried about country risk when making investment decisions. And for good reason: Country risks almost disappeared as we were growing the credit bubble.

The imbalance between China and the U.S. played a key role in growing that credit bubble. In short, Asia sold us cheap exports, and used the income to buy our Treasuries and finance our debt. That resulted in low and comparable rates across the West.

With low rates, country risk simply didn’t exist.

Also, low rates were a great excuse for consumers and governments to borrow like there was no tomorrow. So they did. We went from being the world’s creditors to the world’s largest debtors. Our savings rate plummeted, and suddenly Americans were using their houses as their own personal ATMs.

Then the housing bubble burst. Western consumers quickly realized that they would need to tighten their belts and start saving.

Right now, governments are doing the same thing. They spent like there was no tomorrow and built the credit bubble. Then they spent indiscriminately to fix this credit crisis. Now they have to start scaling back.

Bond vigilantes are not making this easy. These rogue bond investors are like unforgivable creditors who chase consumers who are past due. They are now putting pressure on highly leveraged governments.

Investors are now requiring a risk premium to invest in those countries’ assets, including their currencies.

Eurozone: Where Country Risk Suddenly Matters

There are several examples around the world that indicates investors are now starting to account for country risk in a more significant way.

Maybe the best example is the Eurozone. During the credit bubble, the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) were able to borrow at rates similar to what the healthy giant Germany was paying.

Traders never penalized the deteriorating public finances of those countries. Why would they? Overall, traders believed there was no currency risk in the Eurozone.

But now the market is realizing that currency risk has been replaced by default risk. The market knows the PIIGS can no longer finance themselves at the same cost that Germany does.

Investors are focusing once again on country macro risks. You can see that in today’s diverging interest cost on the chart below. Investments in deficit countries now carry a higher risk premium. And currencies of such countries are no exception.

Diverging yields on 10-year sovereign debt shows country risk is back on investors agenda.

U.K. – the Greatest Cautionary Tale

Bailouts are expensive.

That’s why the global financial crisis hit the developed world harder than emerging markets. For the most part, the emerging markets waited out the storm, while the developed nations shelled out trillions to bail us out.

Of course, all this cash eventually lead to higher fiscal and public debts. Now many major economies are in an extremely fragile position, particularly countries at the periphery of the Eurozone and the U.K.

By far the greatest deterioration in public finances is in the U.K.

Now the market is punishing U.K. assets – especially their bond markets (known as the “gilt market” in the U.K.). Yields on “gilts” are rising. Last week, U.K. gilts were no longer trading like AAA rated bonds.

This means the U.K. is inching closer to a possible failed gilt auction or even an outright default. This increasing risk has pushed the price of insurance against a British default higher over the past few days.

In this case, rising yields of U.K. bonds is not good news for the British pound.

Of course, currency investors like currencies that pay a higher yield. But when rising yields is a result of rising risk premiums, currencies tend to suffer. That’s exactly what happened with the British pound recently.

What This All Means for Forex Traders

The increasing importance of sovereign risk will have a major impact in currencies in the months to come.

The divergence in cost of capital and fiscal situations will lead to well-defined trends in the Forex market. Traders who can spot the right trends can grab a quick 50% to 100%, if they’re on the right side of the trend.

So what trends are shaping up today?

Well, Asia has probably the lowest country risk in today’s world. Most Asian countries have little government debt, strong currency reserves, and few long-term liabilities, such as healthcare and pension.

On the other hand, EU countries, the U.S., Japan, and the U.K., will have to address their fiscal deficit in the years to come. Pressure from bond vigilantes is already forcing governments in Europe to take drastic measures to pay off their debts.

For example, the Portuguese government recently announced that it will present a ‘brave and upfront’ Stability and Growth Plan to reduce deficits. Spain and Greece also announced new austerity measures recently. In the short-term, these announcements should reduce country risk and be positive for the euro.

But there’s no such a thing as a free lunch in economics.

These drastic moves will very likely result in a decline in growth and employment. The decline in risk of a default will come at expense of economic growth. The ECB will have to keep rates at low levels to compensate for the higher taxes and lower government spending.

Bond vigilantes made their first appearance in the Eurozone. These rogue investors are forcing the EU nations to clean up their act fast. Most recently, bond vigilantes also made a visit to the U.K., with the British pound falling by nearly 4% in the last week of February.

Where will they visit next? California? Illinois? Or will they visit the U.K. again? No one knows.

But as a FX investor, I’m looking to short the currencies where bond vigilantes show up next, and buy the nations they avoid for the long run.

Bottom line: Country risks have returned to the market. As a FX trader, be aware of which countries are facing these challenges next. It will hold the key to which currencies you need to buy and sell as this volatility continues.

Best Regards,
Evaldo Albuquerque

About the Author: A recent MBA, Evaldo Albuquerque spends every waking hour monitoring the $4 trillion foreign-exchange market. He specializes in spotting trends in emerging market currencies for his Exotic FX Alert subscribers. You can read about his latest findings in his special report.

(How to Grab Multiple Winners in a Row During the Most “Boring” Hours of Trading)

I want to let you in on a secret that I’ve never revealed here in FX University before. First, let me set the scene…

Last week, central bankers from Australia, Canada, the U.K. and the Eurozone all stepped up to the microphone to announce their rate decisions. This week, the rate decisions continue in both New Zealand and Switzerland.

Like all other professional Forex traders, I always listen closely to each rate decision for any signs that of what central banks may do next.

If a central bank raises rates, then I know most FX traders will buy that currency because they want the higher yield. If central bankers cut rates, it generally means that FX traders will start dumping the lower-yielding currency. In that case, most traders look to sell.

But there’s a trick to trading around central bank announcements that goes beyond that.

Traders all tend to follow similar rules. So “the herd” in the Forex market all reacts in a similar ways as central bankers announce their rate decisions. In response, there are certain events in the Forex market that typically happen before, during and after rate announcements.

In my experience, I’ve found that you always want to trade long before or long after this cycle of events hits the news around a central bank announcement. I’ll explain why in a minute.

In fact, this past week, we got a “textbook” example of this during the Aussie dollar interest rate announcement. Check it out on the chart below.

Trade Well Before …or Well After an Interest Rate Announcement But Not During!

Here’s When You Really Should Be in the Trade!

The safer times to trade interest rate announcements are actually in the hours to day or so BEFORE the interest rate announcement.

Why? It’s because the “big money” (read: the institutional traders) stand aside and cash out their trades ahead of the rate announcements. They’re not trading. So you won’t see a lot of jumps in the market. Instead, the market is likely to be the most stable, have the least surprises and least possibility of breakouts.

As a FX trader, it’s much easier for me to predict this type of controlled Forex environment. It helps ensure that trades don’t suddenly head the wrong way.

Take the Aussie dollar for example. All traders around the world knew that the Reserve Bank of Australia would announce their rate decision last week.

If you zoom in on the five-minute chart below, you will see the 20 hours leading up to that rate decision. As you can see, the AUD/USD (Australia/U.S. dollar) pair was ranging…

Nine Trades over 20 Hours & Only One Loser!

I love trading in the hours before the rate announcement because this is why you have the chance to grab a huge numbers of winners in a row.

In fact, I used the Slow Stochastics indicator (14,3,3 settings) on the chart above. Just by using this one buying signal, I can see nine different trades you could have bought leading up to the rate announcement. An incredible eight out of nine trades were winners. (And of course, if you set a stop-loss, you would have kept your losses on that one rogue loser trade to a minimum.)

In fact, you’ll notice that the closer we get to the actual interest rate announcement, the more accurate the trades became.

The “Herd” Wisdom…and How New Traders Screw This Up!

In the hours leading up to the Reserve Bank of Australia’s rate decision, I chose to buy the AUD/USD, rather than sell.

I wanted to buy because the previous trend had been upward and the fundamentals favored the Aussie dollar. Also, I expected the RBA to hike rates. As I mentioned, whenever a central bank hikes rates, FX traders want to buy that currency to secure the higher yield. All those traders buying tends to boost the currency.

If you expect the central bank to cut rates, or hold rates steady, then you might want to sell (depending on also the fundamentals of the currency at that moment).

Now keep in mind: This is my personal secret. Most traders do NOT do this. In fact, the “herd wisdom” is to trade as soon as central bankers release their actual interest rate announcement.

The novice “news-event traders” always want to trade the actual interest rate announcement the most. They have absolutely NO desire to trade before the rate announcement because they don’t see a lot of opportunity in those “boring ranges and very mild trends.”

However, as you’ll see from the chart above, that can be the most dangerous time for a trade.

When central bankers speak, tons of traders are listening and reacting. So the FX market jumps and whipsaws. That can kill your trade quickly even if you did choose the right direction for your trade.

So the BEST time to trade the pair is in the hours to day or so before the actual rate announcement. The WORST time to trade is right at or around the announcement.

Your Second Chance to Cash in on the Rate Announcement

Now let’s switch gears for a second.

Say you don’t know what central bankers will do at the next rate announcement so you don’t know whether to buy or sell. Or you simply miss the window and can’t trade ahead of the announcement.

You still have a second chance to get in on the gains.

The second best time to trade is long after the interest rate announcement has hit the news. This is usually after the market forms an opinion on what it thinks about the rate announcement. In other words, the majority of traders have decided if the rate announcement is good or bad for the currency. This process can take several hours.

However, after a few hours, the market has usually decided its direction and will start trending in a certain direction again.

Once you can definitely identify the trend, then you can trade in that direction. Keep in mind that if you also traded the currency pair in the hours leading up to the announcement, then you’re trading after the announcement with some profits in your account.

So the lesson here: Allow a few hours to lapse after the announcement comes out and only then start tiptoeing back into the pair. Then you have a buffer to work with as the new trend forms for that currency pair.

Also, if you traded in the hours leading up to the announcement, you racked up gains when the pair was “tame & boring” but yet more likely to be profitable and more predictable.

I hope this short lesson in trading around interest rate announcements has helped you to see the light when it comes to trading when the central bankers speak.

If you learn to trade around these correctly, you really can shoot for multiple winners in a row, while the other novice traders just follow the herd…and get burned.

Happy Trading! Sean Hyman, Professor FX

P.S. This is one of the fundamental trading tools that I use for my Currency Cross Trader subscribers. You can steal more of my secrets in my latest special report here.

Can We Say “Sovereign Debt Default?”

What a week currencies are having! The euro gained ground all the way back to 1.3730 on Wednesday and all the other currencies followed in step…

Now, there’s two ways to look at this…

Either the euro is like a star that’s getting ready to burn out… (Stars always shine brightest before it burns out). Or it’s like a star that had been covered up by another planet, and is coming back into view!

I tend to think it’s the latter of the two… But, the euro is not out of the woods, with regards to Greece. If you think the euro is back in the saddle, you’re going to be disappointed I’m sure!

If you’ve been following the news you know that Germany offered to give Greece a 34 billion euro bailout on Sunday. Well, the latest news has damaged the euphoria that came with that initial bailout.

The news revolves around German Chancellor, Angela Merkel. Now I’ve quoted her many times in the past and have said that I believe she “gets it.”

But she just stuck a dagger through Greece’s heart.

She mentioned a meeting she has planned with the Greek Prime Minister. This meeting, “won’t be about aid commitments,” according to Ms. Merkel.

Uh-Oh! What’s she telling us? Is she saying that the 34 Billion euro package to Greece that the media reported on last Saturday is not going to materialize? That stinks!

Look, as I said the other day, I’m NOT for bailouts. In the Eurozone, one bailout in Greece would probably beget another bailout in the next sister state. In fact, the poor and the needy would be lined up at Germany’s doorstep looking for a handout.

However, it looked, the other day when it was announced, that this bailout was what the markets wanted to see. Traders wanted to see some calm influences in the region. So, in that vein I’m all for it.

But, now Ms. Merkel has thrown a cat among the pigeons…

The French Finance Minister seemed to be singing from the same song sheet as Ms. Merkel, as she said, “if there is a need for assistance, there will be a way to do it, but there is no need at this time.”

In my book, the results from this week’s auction of a 10-year Greek syndicated bond offering will dictate whether there is “need” or not, eh? I mean, if Greece can’t get bonds sold, that’s pretty telling right there!

I’ll keep my eye on this folks and will report back more on this as it becomes available. In the meantime, I suggest you step lightly through the tulips of currencies. Hard metals indeed may be the order of the day.

That’s it for today! Have a Fantastic Friday and a Wonderful Weekend!

Chuck Butler

Why Silver Will Outshine Gold in 2010, 2011 and 2012!

Montreal, Canada: As I mentioned yesterday, I’m a gold-bug. I have been recommending my subscribers buy gold since it was selling south of $400 an ounce back in 2003. And I continue to recommend gold plays to this day.

But as bullish as I am on gold, I still can’t deny the amazing opportunities available in silver right now.

Universally regarded as the “poor man’s gold,” silver is on the cusp of a major secular rally that will outpace even gold in 2010-2011.

And why not? If you adjust for inflation since 1980, silver should be trading at roughly $128 an ounce. As of yesterday, silver is only at $17 bucks.

So what’s been holding silver back?

For starters, four major short-sellers including J.P. Morgan have been manipulating the silver markets. These short-sellers have placed enormous pressure on silver prices over the last several months. That’s a shame considering investment demand for silver continues to soar, mainly from booming coin sales and silver ETFs.

But that’s all about to change. There are several events happening around the world that will definitely put the odds in silver’s favor again. In fact, I see silver busting through its high of $20.78 silver reached in March 2008. Let me explain why…

Why Silver Is Heading to $21 an Ounce Minimum

We have a supply demand issue happening here. Global silver production is projected to barely grow this year, at a time when investment circles continue to demand more of the poor man’s gold. Also, production costs are rising for silver, which will push the price higher.

But despite this obvious supply and demand advantage since 2000, silver continues to trail gold.

The price is way below silver’s all-time high of $49.45 reached in 1980 when the Hunt brothers tried to corner the market. Gold, on the other hand, hit a nominal all-time high in early December at $1,217 an ounce.

Over the last 10 years spot silver prices have rallied a cumulative 219%, while gold prices have shot up 295%. You can see that on the chart below…

But again this is all starting to change. Over the last 12 months – marked by a wicked recovery in most risk-based assets – silver has jumped 37% while gold has only climbed 25%.

A period of silver outperformance might have indeed begun. If demand continues to grow, courtesy of ETFs and silver coins, silver prices can easily surpass their March 2008 highs this year. In other words, silver should break through $20 again.

Meanwhile, the supply-side story for silver remains bullish.

Silver Supply Drops By 94%, While Governments
Hoard What Silver They Have

According to the consultancy firm CPM, 12 billion ounces of silver existed back in 1900. That figure has plunged to only 680.9 million ounces in 2008, according to the Silver Institute (latest figures available).

So over the last 110 years we’ve seen a massive 94% drop in above-ground supply. That’s a staggering figure!

In 2008, global silver mine production grew by 2.5%. That was actually the 6th year of consecutive output growth and 77% of total supply for that calendar year.

Peru once again ranked as the largest silver-producing nation in 2008. Peru produced a total of 118.3 million ounce of silver in 2008 or 17.4% of total world production.

After Peru, major silver miners include Mexico, China, Australia and Chile, according to the Silver Institute.

There’s another bullish trend for silver brewing around the world. It should underpin my forecast of $21 silver over the next 12 months.

It’s the accelerated decline of government silver sales. Nobody wants to sell their silver.

The net supply of silver from aboveground stocks fell by 14% in 2008 to 151.7 million ounces. That was mainly due to lower net government sales and a drop in scrap supply.

Russia, China and India all cut down their silver sales. That resulted in a 27% fall in government sales in 2008 to 30.9 million ounces.

So in short, supplies above ground are dropping and governments refuse to sell what silver they have.

Silver Conspiracy Afoot?

The major obstacle to higher prices over the near term remains the big banks, including J.P. Morgan. Some sort of financial conspiracy is now circulating around investment circles, and it’s suppressing silver prices. Silver-bugs are now saying that J.P. Morgan is aggressively shorting silver.

Also, the largest U.S. banks act as custodians for SLV or the iShares Silver Trust on the NYSE. These banks are rumored to hold a massive silver short position of 200 million ounces.

That statistic alone, more than any other variable is casting a shadow on major resistance at $20 an ounce – at least for now. (By the way, 200 million ounces is worth more than the entire production of Peruvian silver in 2008.)

But I suspect that over the next 6-12 months the forces of supply and demand will return to overwhelm the short-sellers because aboveground supplies will decline in 2010.

If gold dominated the first 10 years of the precious metals bull market then silver will assume leadership over the next 36-60 months.

It’s inevitable. In the next few years, we will see a lethal combination of a sovereign debt crisis and any dollar crashes unleash a new demand for both metals in an environment of steadily rising inflation.

Also we have central bankers who can seriously destroy this recovery, starting with the Fed.

I expect only a gradual tightening phase by the Federal Reserve starting later this year – and only if U.S. unemployment declines. If I’m right, then silver is bound to rise further and eventually break $20.78 an ounce.

Also, in the history of finance, we have never seen this much government stimulus poured into markets at any one time. Now, it’s up to the central bankers to remove that stimulus.

If they are not successful…if they make wrong move…central bankers could trigger some sort of renewed liquidity crisis, currency meltdown or a crash in global financial markets. If that happens, hard metals will soar. You will want to have silver in your portfolio.

We are still living in uncertain economic times. Hard money rules.

Till next time – best regards,
Eric Roseman, Editor
Commodity Trend Alert

P.S. If you want to learn more about to diversify into hard metals for your long-term currency portfolio, I explain how to buy “scratch and dent” silver for a 25% discount in my latest report. You can pick up your free copy here.

Why the Technical Picture for Gold Just Turned Bullish Again

Big news for all technical traders! Gold just broke its downward correction. This means gold is about to take a U-Turn and head higher based on a few technical indicators.

Specifically, gold broke above its downward correction line (red line) and climbed back up above its blue 50 day Simple Moving Average (SMA).

Next, the RSI and MACD are on the move higher. Also, the yellow metal never made it below its upward sloping 200 day SMA. These are all bullish signs for gold!

You can see more specifics on the chart below…

So why is this technical picture turning around for gold?

It’s because fears are rising in the market. Traders are getting anxious. Every day you turn on the TV, all they talk about are growing debts/deficits and the possibility of a country defaulting (read: Greece).

In case you don’t think this could be a big deal, let me remind you about Argentina and its default. When Argentina couldn’t pay back their bondholders, this one event rattled markets around the world. That was just Argentina – not some major economic powerhouse in the world like the EU.

On top of this, Germany, France and the U.K. all hold large sums of Greek debt. They also hold debt in the rest of the PIIGS (Portugal, Ireland, Italy, Greece and Spain). So if any of these countries default, they will definitely get burned too!

Another huge dynamic is the quick rise of inflation from around the world! Part of gold’s appeal is that it’s a hedge against inflation (in addition to being a cure for the “fear factor”).

Just months ago, only two of the eight major economies had ANY inflation. The rest were still in a deflationary mode. Roll the hands of time forward a few months and now seven of the eight major economies have inflation. Some of them have a LOT of it! Check it out below.

Growing Global Inflation = Growing Gold Prices!

So while many people bash gold and say that this rally is over…I say we just corrected and consolidated a large move higher AND that we’re getting ready for the next major “leg upward” in this gold rally. Make sure you’re ready too!

Happy Trading!
Sean Hyman, Professor FX

P.S. This is the exactly the kind of moves that I reveal twice a week in my Chart of the Day videos. If you have been missing this FREE educational tool, you can catch the latest video in the sidebar of FX University Daily each day.

Why the World’s Most Respected Hedge Fund Manager Just Bluffed about a So-Called “Gold Bubble”

Don’t do as they say, do as they do…and that goes double for legendary investors.

You won’t find a more legendary hedge fund manager than George Soros. His Quantum Fund ranks as the most profitable global macro hedge fund over the last 40 years.

Soros is also known as the man who predicted this credit crisis…he’s 29th on the Forbes Richest list…and he’s the FX trader who broke the Bank of England shorting the pound in the early 90s.

When Soros speaks, the entire investment world listens.

So when CNBC and Bloomberg asked Soros about my favorite asset – gold – at the Davos World Economic Forum in Switzerland, I definitely stopped what I was doing to pay attention.

Soros lamented that gold was the “ultimate asset bubble” and that there was “no alternative to the dollar.” What? Gold’s in a bubble? I was baffled – how could he believe that?

Well, it turns out he doesn’t. Looks like Soros was bluffing…

Iron-clad Proof that Soros Just Pulled a Fast One

SEC filings in the United States show that Soros Fund Management purchased 6.2 million shares of GLD for $663 million in the fourth quarter of 2009. That position increased from 2.5 million shares of GLD in Q3.

So Soros is loading up on the gold-backed ETFs. In fact, the $25 billion dollar New York-based firm became the fourth largest holder in the SPDR Gold Trust.

Those are pretty impressive statistics for someone who’s resolutely bearish on gold.

While Soros has been slamming gold, his famous hedge fund continues to build a stake in the yellow metal.

After the Davos comment on gold, Richard Russell, one of my favorite investment analysts and commentators, chastised Soros for the bearish remark.

Russell, who began his career publishing Dow Theory Letters back in 1957, ripped into Soros…

Why was such a smart man talking down gold? Soros had made fortunes in his career shorting the dollar and surely America’s profligate spending since 2008 must be a concern for the savvy hedge fund manager.

It may have to do with Obama’s political affiliations…

Obama’s Dollar Champion?

Soros has become a big part of the Obama establishment. The investor extraordinaire and philanthropist was a major supporter of the Obama campaign. He was recently awarded economic incentives in the energy patch among other undisclosed economic favors.

Though I certainly can’t quantify these political kickbacks, it seems a fair assessment that Soros is closely tied to the Obama Administration. Does he publicly support the dollar while simultaneously accumulate gold as a hedge?

Along with John Paulson, heavily long and strong gold and gold stocks since 2009, George Soros joins the list of prominent money-managers building stakes in gold.

At least gurus like Paulson have come clean and stand behind their gold stakes.

Soros, on the other hand, says one thing and does another. But one thing they both have in common is that they’re bullish on gold. The odds that Paulson and Soros are wrong on this trade are highly unlikely – especially when emerging market central bankers are also buying up stakes in gold over the last year.

Personally, I’ve been long gold and strong on gold (and her sister metal silver) since 2003. In that time, I have recommended over 30 gold and silver plays for my Commodity Trend Alert subscribers. On March 21 personally purchased a 1 kilogram bar of gold at about $1,000 an ounce, further building my stake. I remain very bullish.

These days, I have a whole “gold-bugs” portfolio for my subscribers, which include hefty positions in gold and silver at a combined 44%. This portfolio just gained 5.1% last month, as Soros announced that gold was in a bubble.

Also, as I told attendees at FX University last week, I have several gold positions that I will NEVER sell. I’m holding these gems as my long-term portfolio insurance. One of those includes my all-time favorite gold position, Goldcorp (NYSE: GG). My Commodity Trend Alert subscribers are already up over 158% on this play, but I still consider it a good buy at these levels.

I consider gold gems like this my hedges against any uncertainty coming in the dollar, and global markets in the coming months…no matter what Soros says.

I’ll be back tomorrow with the simplest strategy to invest in what I call “poor man’s gold.”

Till then – best regards,
Eric Roseman, Editor
Commodity Trend Alert

About the Author: Today’s guest writer, Eric Roseman is one of the most respected and sought-after hard-metal experts in the business. An 18-year veteran in the markets, Eric acts as CEO of his own money management firm in Montreal. But you won’t find at home very often. Eric spends most of the year traveling to uncover the next investment opportunities on five different continents. You can read about his latest findings in his special report, How to Buy “Scratch-and-Dent” Silver… at a 25.3% Discount.