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The One Obvious Trade Right Now

By Dr. Steve Sjuggerud
Tuesday, August 12, 2014

Europe's currency – the euro – is going down...
 
The reasoning is simple.
 
A weaker euro is politically the easiest fix available...
 
You see, Europe is struggling right now. But inflation is not a problem. So a weaker currency is an easy fix. And that is the exact solution that Europe is pursuing today.
 
If you haven't taken advantage of this situation yet, there's an easy way to do it through your regular brokerage account.
 
Let me explain exactly what's happening, and how to trade it.
 
From The Wall Street Journal last week:
 
European Central Bank President Mario Draghi signaled Thursday he was pleased with the recent decline in the euro's exchange rate and outlined a number of forces that may weaken it further...

Mr. Draghi, according to the article, made "unusually blunt comments about exchange rates. Central bankers typically shy away from such direct remarks on currencies."
 
Government officials might be incompetent at a lot of things... But one thing they can do very well is "trash" their currencies. And the euro is in the midst of its trashing. Draghi isn't even trying to hide it.
 
Two months ago in DailyWealth, I explained exactly how to make this trade, through an exchange-traded fund – the ProShares UltraShort Euro Fund (EUO).
 
I wouldn't change a word of it today. Please read it:
 
As I write, we have an uptrend in EUO. EUO is breaking out to highs not seen since early February of this year. It's looking good.
 
Thankfully, you can set this trade up in a high-reward, low-downside-risk way...
 
EUO is a unique investment... It will give you a lot more upside than the currency itself, if I'm right about the euro.
 
Here's how it works: If the euro falls by 1% in a day, this fund will rise by 2%. The opposite is true as well – if the euro rises 1% in a day, this fund will fall by 2%. (A proper description for this type of fund would be to call it an "inverse 2x fund.")
 
In short, Draghi is going to "trash" the euro. And EUO is an easy way to profit as he does.

I wrote that two months ago. The picture has only gotten clearer since then. Draghi is closer to unleashing a QE-style stimulus in Europe. He's willing to do anything to continue to "trash" to euro. But the euro hasn't moved that much – yet.
 
Europe's politicians want a weaker euro. They will get it. And you can profit from it, by buying EUO – an inverse fund.
 
I suggest getting on board today...
 
Good investing,
 
Steve




Further Reading:

The European market is still well below its pre-crisis highs. "Because of this," Steve writes, "Europe offers a better opportunity than the U.S. right now. Buying Europe today is a lot like buying U.S. stocks two years ago." Get all the details here.
 
Dr. David Eifrig recently urged American investors to add international stocks to their portfolios. If you do, he says, "you can avoid 'overleveraging' your exposure to the U.S. economy... and also pick up some investment bargains." And Hong Kong is on his list of the best bargains today. To see the full list, click here.

Market Notes


AN UPDATE ON ONE OF OUR FAVORITE GOLD STOCKS

Today's chart looks at the recent price action in one of our favorite gold stocks...
 
In February, Steve Sjuggerud told DailyWealth readers about an opportunity in shares of Royal Gold (RGLD). According to Steve, Royal Gold was a screaming bargain... even cheaper – based on price-to-book ratio – than it was after the 2008 crash.
 
Regular readers also know we see Royal Gold's "royalty model" as one of the great "sleep at night" ways to invest in gold. Royal Gold mines no gold of its own. Instead, it finances lots of early-stage mining projects. If things work out, it earns a royalty on the mine's production. This is a safer, more diversified way of investing in gold production, rather than buying a company focused on one big strike.
 
In the chart below, you'll see Royal Gold (black line) compared with the price of gold (blue line). Since Steve's note in February, RGLD has gone up 18%, while the price of gold has remained flat. And over the past year, RGLD has out-returned physical gold by more than 45%. It's a tremendous display of business and share-price strength. That's why, according to Steve, "it might be the safest gold stock you can own."
 

premium teaser

Another opportunity to profit from a falling euro...
 
In today's DailyWealth, I explained why the euro will fall. But we have another fantastic opportunity...
 

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