By Kieth Fitzgerald
www.moneymorning.com
"At this stage in the game, the thing you don't want to do is bail out. What you do want to do is make sure you have your protective stops in place, get your pencils ready because there's a possibility that many good companies are going to get put on sale, and history shows that you buy into massive sell-offs, not run the other way." - Keith Fitzgerald
Q: What will happen in Europe?
Greece chickens out. The G20 has its hands out and wants to have Germany's standard of living. Germany should leave the EU and preserve its economy. There is no reason it should sacrifice itself to pay for the malfeasance and incompetence of everybody else.
Politicians will kick the can down the road while hoping rumors of future action will carry the day.
Q: Will we get a bailout? Greece chickens out. The G20 has its hands out and wants to have Germany's standard of living. Germany should leave the EU and preserve its economy. There is no reason it should sacrifice itself to pay for the malfeasance and incompetence of everybody else.
Politicians will kick the can down the road while hoping rumors of future action will carry the day.
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Will we get a bailout? - I think it's a foregone conclusion. The only question is whether or not we go through the front door or the back door.
I believe the Federal Reserve will get involved ultimately to bailout the European banking system, which will grind to a halt. This has significant ramifications at the very highest political levels in Europe and the United States, especially with the U.S. heading into elections and approaching a repeat of the debt debates.
Q: Would I own stocks going into this weekend when so much is on the line?
Yes. No question about it. At this stage of the game, bailing out is the wrong thing to do. Many good companies will get put on sale and history shows that you want to buy into chaos rather than run the other way.
Q: Finally, what will this global chaos do to gold prices?
I expect gold prices to drop initially, perhaps even sharply, as trading houses raise cash. But the moment a bailout is announced, watch gold head the other way. The only question at this point is the order: drop first, bailout later or bailout first, correct, and rise later.
Ultimately gold will resume its place at the head of the class. I still expect $2,000 an ounce or higher within the next 12 months.
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Yes. No question about it. At this stage of the game, bailing out is the wrong thing to do. Many good companies will get put on sale and history shows that you want to buy into chaos rather than run the other way.
Q: Finally, what will this global chaos do to gold prices?
I expect gold prices to drop initially, perhaps even sharply, as trading houses raise cash. But the moment a bailout is announced, watch gold head the other way. The only question at this point is the order: drop first, bailout later or bailout first, correct, and rise later.
Ultimately gold will resume its place at the head of the class. I still expect $2,000 an ounce or higher within the next 12 months.
Related Articles and News:
- Money Morning:
5 Ways to Avoid the “Spailout” and Sleep Soundly at Night - Money Morning: Three Reasons Why the U.S. Dollar is Really Rising
- Money Morning:
Everything You Need to Know About Gold Prices - Money Morning:
Why the Spain Bailout Package Won't Work
About the Author
Keith Fitz-Gerald has been the Money Morning team Chief Investment Strategist since 2008. He’s a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to being editor of the Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and the Strike Force service, which aims to get in, target gains, and get out clean. Learn more about Keith on our contributors page.
Keith Fitz-Gerald has been the Money Morning team Chief Investment Strategist since 2008. He’s a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to being editor of the Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and the Strike Force service, which aims to get in, target gains, and get out clean. Learn more about Keith on our contributors page.View articles by Keith Fitz-Gerald
Source: The Eurozone Bailout: Prepare for What's Next:
