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Massive Credit Crunch Striking Now!

Stock-Markets / Credit Crunch Aug 20, 2007 - 09:53 AM GMT

By: Money_and_Markets

Stock-Markets Best Financial Markets Analysis Article

Martin Weiss writes: A massive credit crunch is striking, and you sit at a critical juncture like none other in history.

Never before have you seen so much wealth at stake. Never before have you seen such massive threats to that wealth. And, fortunately, never before have investors had such powerful tools to protect themselves from these threats!

In just the last few days, the U.S. Federal Reserve has desperately tried to rescue the nation's gigantic $10 trillion mortgage market …

Flooding the banking system with cold cash …

Slashing its discount rate by a half point, and, in a special meeting just this past Friday …

Literally begging America's largest banks to borrow!

But for the massive U.S. mortgage market — crumbling in 20,000 cities and towns all across America — it's too little, too late.

And for the U.S. dollar — already sinking for years under the weight of the largest trade deficits of all time — the sudden flood of more paper dollars is too much, too soon.

That's why I called an emergency teleconference last week and why it was sought out by 15,000 investors from all over the world.

That's also why, this morning, I'm giving you the transcript of the entire hard-hitting, fast-paced event, making this the biggest — and probably most important — Money and Markets issue we've ever published.

The Spreading Credit Crunch: Protect Yourself and Profit!
Edited Transcript of Weiss Research's
Emergency Teleconference

Tom Jeffries: Welcome! My name is Tom Jeffries, your host for today. I've been a broadcaster for over 25 years and I host a show on investing in the markets heard every week around the world.

This conference — taking place right in the midst of America's worst credit crunch in decades — could not be more timely. And the team we have assembled for you today, led by Dr. Martin Weiss, could not be better suited to help you through it.

Martin Weiss founded his company, Weiss Research, 36 years ago with one paramount goal: To provide for the financial safety and well-being of his customers.

Dr. Weiss was recognized by the U.S. Congress for introducing the first-ever independent safety ratings in the United States. And he was described by The New York Times as the first to see the financial dangers and say so with precision.

So it should come as no surprise that Dr. Weiss and his team were also among the first to warn you about the unusual crisis that America faces right now, today: The breakdown in America's vast market for home mortgages … and now … a credit crunch that's striking many financial markets.

From the beginning Dr. Weiss and his team were way ahead of this crisis: Right now, for example, I'm looking at an issue of the Safe Money Report that Dr. Weiss and Mike Larson wrote back in February of 2005. Listen to this headline: "REAL ESTATE BOOM AND BUST, three alarming warnings of coming declines."

Or consider this headline from the Safe Money Report of this past February: "MORTGAGE MELTDOWN!" And let me read to you what it says right here on the first page: "Delinquencies and defaults will migrate up the food chain — to larger, more diversified mortgage lenders, even major investment banks."

Folks, what I just read to you is today's news! But Martin Weiss and Mike Larson wrote you about it six months ago.

I've been personally following Dr. Weiss and his team for a long time now. I've interviewed them on my international radio show over and over again. And I'm continually blown away by their foresight.

But what impresses me even more is that they go far beyond just warnings. They also offer solutions — solutions that not only protect your wealth, but also build your wealth … that not only safeguard you against the dangers, but also help transform those dangers into major profit opportunities.

Martin, the stuffing is hitting the fan right now. Please give us, in a word, your overview of what you see.

Martin Weiss: Complacency!

Tom: I know exactly what you're talking about, Martin. I talk to investors all the time. Nearly everyone is saying: "Don't worry, about it. Stick it out. This will blow over soon."

Martin: The emperor has no clothes! The little boy has already shouted to the investors in the crowd to announce that the emperor has no clothes. Anyone reading today's headlines can see that the emperor has no clothes. But still, most investors are frozen like a deer in the headlights. They have not yet taken action to protect their assets!

Tom: What's holding them back? Where do you see the greatest danger right now? And where do you see the greatest opportunities ?

Martin: The gravest danger is in a vast market that few people are paying attention to, and fewer still really understand: The U.S. dollar! The U.S. dollar is in grave danger! And some of the greatest opportunities are going to be in the currencies that rise as the dollar falls.

This isn't like the crisis of one decade ago, which started in Thailand and smashed the currencies of Asia. This isn't like the crisis of two decades ago that started in Mexico and then smashed the currencies of Latin America. The epicenter of this earthquake is right here in the United States, and it's going to smash the U.S. dollar.

Tom: OK. But you didn't answer my first question: Why are people still complacent? What's holding investors from heading to the exits?

Martin: It's all in one three-letter word: F - E - D. The Federal Reserve! It's the deeply held, widely accepted faith that the U.S. Federal Reserve will somehow rescue everyone. They believe the Fed will wave its magic wand and resolve the crisis with money, endless amounts of cold cash. They hope the Fed will absorb all the bad mortgages and all the bad debts.

"Sacrificing the U.S. dollar on the altar of the housing market!"

Tom: Do you agree with that belief?

Martin: Ultimately, no. But in the short term, the Fed will do everything to try.

Tom: We already know that, don't we. It's has already started, hasn't it?

Martin: Yes. The Fed pumped in $24 billion on August 9th. On August 10th, it pumped in another $38 billion! And since then, still more!

Tom: So what does that mean?

Martin: It means that, in their zeal to put out the fires here in the United States, they're actually sacrificing the one market that really matters the most in the long term — the U.S. dollar. They're sacrificing the dollar on the altar of the U.S. housing market!

Tom: Please connect the dots for all those who have logged on to this conference today.

Martin: Anyone who's been paying attention knows that the decline in the U.S. dollar has been a fact of life for years. But so far, that decline has been gradual, and therefore, invisible to most investors.

Now, the Fed is pumping out huge amounts of paper dollars. And that glut of newly printed U.S. dollars inevitably cheapens the value of every dollar — every dollar in your pocket, every dollar in your bank account.

Plus, the Fed has pledged to continue pouring out as many dollars as needed, for as long as needed.

That means the slow, steady erosion in the purchasing power of your dollars that we've seen for so long is going to accelerate, and do so wildly!

Tom: In your view, for how long will the Fed try to solve this crisis by throwing paper dollars at it?

Martin: Look at what's happening all over America! This is not a local brushfire. We're not talking about a little market. We're talking about the market for U.S. mortgages . The market for mortgages is the largest market for credit in the world. It's larger than the entire market for U.S. government securities. It's far larger than the commercial and industrial loans to all of America's corporations.

Tom: And we're not just talking just about a passing crisis, here today, gone mañana, are we?

Martin: No. It's the worst meltdown in the mortgage market in our lifetime.

Tom: So how long do you think the Fed will keep pumping out cheaper and cheaper dollars?

Martin: Until the dollar falls so far they can't ignore it any longer … until they realize the dollar decline is the greater of the evils … until they finally give up trying to save the housing and mortgage markets.

Tom: Which brings me to my first big first question for your team of analysts today: Is the mortgage crisis nearing a climax? Or has it just barely begun?

Martin: I think the person best qualified to answer that question is Mike Larson.

Tom: I've had the pleasure of talking to Mike many times on my show. Mike is your research analyst behind those uncannily accurate housing market forecasts that I talked about a moment ago. He's been Weiss Research's real estate specialist for five years. And more recently, he's become the go-to guy for virtually every financial news reporter in the country, including yours truly.

Mike, I'm an avid reader of your articles in Money and Markets every Friday. And I'm seeing you more and more often on CNBC, Bloomberg and CNN … in Barron's, the New York Times, the Wall Street Journal.

And just recently, you submitted a white paper to the Fed and the FDIC about this crisis. You held a press conference with some of the nation's leading news organizations. Can you tell us what you told them?

"What's the next bubble that's going to save us from the housing bust?"

Mike Larson: Absolutely! Plus, I'll also tell you what I didn't tell them — namely the events of just the last few days.

First, look at what Fed Chairman Alan Greenspan did a few years ago when the tech market was melting down and the Nasdaq was falling apart. He slashed interest rates to the bone and helped create a new bubble to bail out us out of the tech wreck.

So if the housing bubble is what saved us from the Nasdaq bust, the question now becomes: What's the next bubble that's going to save us from the housing bust?

You've got 14% of subprime mortgages delinquent in the first quarter. You've got surging late payments in the so-called Alt-A mortgages, which are supposed to be somewhat better quality. You've got lenders like Countrywide Financial warning that even their prime credit quality borrowers are having trouble paying back their home equity loans.

It makes perfect sense. It's exactly how you'd expect it to play out. But for some reason it seems to be a "big surprise" on Wall Street. And some of these numbers are really staggering:

Foreclosure filings in the U.S. were up 87% compared to a year ago this June. We're seeing the percent of nationwide mortgages entering foreclosure at the highest level ever . And we're not even in recession! That's really scary.

What's also scary is that almost every day there's another mortgage lender that's added to the casualty list. There are more than 110 that have either thrown in the towel and gotten out of the mortgage market entirely or that have gone broke.

Home Banc out of Atlanta — broke August 10th. Aegis Mortgage out of Houston — broke August 13th.

Martin: That's just a few days ago!

Mike: This company made $17 billion in mortgages in 2006. So it's not just any tiny company. And of course you've probably heard of American Home Mortgage of Long Island. Broke August 6! Last year, they made almost $60 billion in mortgages!

Tom: $60 billion?! Unbelievable. But let's talk about the mortgage REITs.

Mike: OK. The point is you don't have just the lenders that make the loans getting into trouble. You've also got these companies called mortgage REITs — or real estate investment trusts — who buy the loans and hold them on their books. Now, Wall Street discovers, all of a sudden, that the underlying credit is so terrible on these loans they're pulling back the money across the board.

It started in the subprime. It migrated up the food chain. Now it's reaching the big banks — the ones everyone has heard of. You walk by their signs everyday: Wells Fargo, National City, Wachovia. They're starting to eliminate the loan programs they offer. And they're raising standards on others.

This means that, if you're a homebuyer, you're finding it harder and harder to qualify for a mortgage. And if you're someone who's stuck in one of these bad loans and seeking to refinance it, good luck!

"Major mortgage company stocks are crushed!
Down 70%, 80%, 90% this year alone!"

Tom: What about mortgage company stocks?

Mike: Crushed! When you look at the overall Dow or S&P, you may not realize it. But some of these stocks are down 70%, 80%, 90%. They've lost that much of their value this year alone. It's also hitting the Wall Street banks that are funding these companies: The JP Morgans and the Citigroups of the world.

I see two scenarios:

In the best case scenario, we may see something like the 1998 crisis. That's when that gun-slinging hedge fund Long Term Capital Management and all of its rocket scientists lost billions on high-risk bond market bets. The bets went sour. The New York Fed stepped in to organize a bail-out. But the overall economy muddled through.

In a worst-case scenario, you'll get something like the savings and loan crisis of the late '80s and early '90s. These kind of events — plus interest rate surges — combined to cause more than 1,000 S&Ls to fail. The U.S. government had to step in with a $150 billion bailout. The economy slipped into recession.

Martin: Let me sum up: Regardless of the scenarios, this is far too big for the Fed just to paper over with dollars. And yet that's the only tool they seem to have at their disposal. They're just pumping out more and more paper dollars into the financial markets to try and ease the crisis. For the future of the U.S. dollar, this is a terrible situation.

Tom: Before we talk about the dollar, can we first get closure on this real estate mess? I live on the West Coast. If I have investment real estate in my area, or if I have real estate investments in the stock market, what should I do right now to protect myself?

Martin: We recommend three strategies. The first strategy is to reduce your exposure. If you have investment properties, get rid of them. Sell!

Tom: Wait a second, Martin! We're talking real estate. I can't just call my broker and say "Hi, it's Tom, sell everything at the market." It takes time to unwind, to unload properties.

Martin: That's why we also have a second strategy:

Tom: Which is … ?

Martin: Which is to buy some hedges, some insurance. And fortunately, there are several available today that are ideal for this situation.

I'm talking about an ETF that's designed to go up 20 percent for every 10 percent decline in the Dow Jones U.S. Real Estate index. When the index goes down, this ETF goes up at double the pace. Would you like that symbol?

Tom: Yes!

Martin: It's SRS. That's good for protecting you from your real estate investments. But as Mike explained, this crisis is migrating up the food chain and beginning to effect banks and other financial companies. So here's another one you can use to protect yourself.

This is also an ETF. It's also designed to go up 20 percent for every 10 percent decline. But instead of being tied to the real estate index, it's tied to the Dow Jones U.S. Financial Index. The symbol is SKF.

One word of warning: These investments are double-edged swords. They surge when real estate or the financial stocks are falling, but if those stocks rally, then these ETFs can obviously fall.

So we also have a third strategy, which I think is the better solution — a solution that helps you profit from the primary consequence of this crisis — the falling dollar — and to do so continually, over and over again, month after month.

"Investors in Asia are now very concerned that this mortgage crisis is going to drive the dollar down faster than ever before."

Tom: And that's why we've invited two world-renown experts on the dollar. First, let me introduce Larry Edelson. Larry is one of the world's leading gold analysts, and along with his bullish forecasts for gold, he has been tirelessly and repeatedly warning about the decline in the buck — the decline that is now unfolding.

And man, does this gentleman travel! Larry's just back from Asia, and he's on the call right now to give us the Asian perspective on this crisis. Where did you go in Asia this time, Larry?

Larry Edelson: I was in Thailand, Singapore, the Philippines and Australia. I go to Asia three or four times a year. This trip was a doozie, and I'm just getting over the jet lag.

But it was also a doozie from another point of view: I've been traveling to Asia for eight years, and investor confidence in the U.S. markets was usually great, even in the post 9-11 period.

But now, for the first time, I've started to hear and see things that I haven't heard or seen before: Not just among market traders and investors. But also on the street … talking to taxi drivers … having coffee at Starbucks … just about everywhere.

For the first time, people in Asia are very, very worried about what's happening in the United States. They see the dollar plunging virtually nonstop. And now, they're very concerned that this mortgage crisis is going to drive the dollar down faster than ever before. Conversely, of course, that also means that foreign currencies are going to go up more sharply than ever before.

Tom: Does that mean international investors are going to start shifting from the U.S. to stronger economies in Asia?

Larry: Going to? They've already been doing it! First, as many of you know, the Asian stock markets have been outperforming the U.S. stock market for some time, dramatically outperforming. Asian economies are fundamentally much stronger than ours. Their GDP growth levels are three, four, five times the U.S. growth levels.

Between India, China and Southeast Asia, 40% of the world's population is coming out of communist regimes or restrictive socialist democracies that are opening up … and all demanding improved lifestyles at the same time. So the demand factor alone is going to keep those economies cooking at higher growth rates than the U.S.

But Asian investors also have big money in the United States, and they're looking to bring it back.

Tom: OK. Put two and two together for us.

Larry: They see the mortgage crisis. It's all over the headlines there. Not just the business pages, but headlines in the main section: "Mortgage meltdown in the U.S." "Real estate crash in America."

This is a shock to them. Keep in mind, they don't borrow money like we do. They have a high-savings culture. So the whole notion of going deeply in debt to buy anything is foreign to them. And this mortgage crisis is really scaring the heck out of them. On top of that, they see the Fed pumping more and more cheap dollars.

Foreign investors are acutely aware of currency values. Unlike us here in the United States, they look at the value of their currency and the value of the dollar every day. They check it daily just like we check the weather or the Dow Jones Industrials. When they see the Fed putting the pedal to the metal on the printing press, they conclude the dollar has no place to go but down.

That means other currencies vis-à-vis the dollar — be it the euro, the Swiss franc, the yen, the Australian dollar, or the Canadian dollar — are going to go up against the dollar. So foreign investors are going to do everything they can to protect themselves.

They're shifting out of U.S. dollars. They're bringing their money home. And, unfortunately, that creates a vicious cycle. The more they sell, the lower the dollar goes and the more frightened they get.

Bottom line: The U.S. dollar's purchasing power has been — and is more likely to be than ever before — evaporating because of this crisis. I think the decline you've seen in the dollar so far is just Act One. I think Act Two is beginning now ,and it could be very dramatic.

Tom: Let's go straight to the 64- milion- dollar question: Specifically how do you profit from this monumental shift?

Martin: You get out of dollars, which are losing value, and you get into foreign currencies, which are rising in value. And to tell us how to do this, I've invited our good friend to join us. His name is Jack Crooks.

"The currency market is, without a doubt, the largest market in the world— and the most liquid."

Tom: I'm glad you did, Martin. And I'm very pleased to see that Jack Crooks is a long-time friend and associate of Weiss Research. I have interviewed Jack many times. I know Jack has more than 20 years of experience in the foreign currency market.

That's why many of the world's most influential investment news outlets rely on Jack for timely guidance on currency information. And right now, Jack is working with a revolutionary new breakthrough in the world currency market.

Jack, welcome. First tell us about the currency market. Then tell us about the revolutionary breakthrough.

Jack Crooks: The currency market is, without a doubt, the largest market in the world — and the most liquid. $3 trillion dollars a day trade in the currency market. That's more than all of the world's stock markets combined.

What I like most — one of the reasons I specialize in this market — is that there's always a bull market in currencies. It gives you the power to make money regardless of what's happening in the stock market, whether it's soaring or plunging in value.

If real estate is booming, there are opportunities in the currency market. If it's busting, there are opportunities. Same with interest rates — whether soaring or falling. Ditto for bonds and commodities. No matter what's happening elsewhere, opportunities abound in the currency market.

Tom: Why is that?

Jack: It's pretty simple. Currencies are different from stocks, bonds or commodities in that you make money buying and selling one currency against another.

Tom: I think I get the picture. It's like a see-saw. When one is going down, the other one has to be going up. So there are always currencies going up. There is always a bull market. So if you knew, for example, that the dollar is going to plunge against another currency, you could buy that currency and make a lot of money, right?

Jack: Yes. But let me add something that you may be missing. It's not just because of the see-saw effect. Equally important is the fact that currencies move independently from stocks and bonds. They are non-correlated. What that means to the average investor is that currencies are a great asset class for diversification.

Tom: Boy, this is really intriguing to me. But isn't it true that currencies have always been reserved for the mega-rich only. Why is that?

Jack: In the past, it took a huge account to get involved in the currency market. You probably needed a million dollars just to get the dealer to answer the phone. Plus, you had huge risk. The way they were set up in the past, you could lose more — a lot more — than you invested.

But not anymore. Now, for the first time ever, the gates to this market are being flung wide open for the average investor. You're seeing a new class of vehicles that give investors virtually unlimited profit potential … but strictly limit their risk.

Tom: Explain why that's so important?

Jack: Until now, there have only been a couple of viable vehicles you could use to trade currencies.

One is the currency futures markets. In that market, you trade against the major speculators and commercial hedgers in the world.

The other market is the cash foreign exchange market — spot Forex. This is a market that's controlled by the major money center banks and governments.

So in both those market, you're trading against big, powerful players. You can make a lot of money. They're very liquid, very dynamic. But for the average investor, one of the big downsides — in either futures or cash Forex — is that you're exposed to unlimited risk.

"A solution to making money in the currency market that's nothing short of revolutionary."

Tom: Jack, you and I have been talking about this months. So I happen to know a little bit about it. The profit opportunities in currencies are unbelievable. But the risk is huge. One tiny move, and unless you have plenty of capital, you could be wiped out. But, you've also told me that now you have a solution, and from everything I've seen, your solution is nothing short of revolutionary. So please tell us exactly what that is.

Jack: It's the new currency ETFs, or exchange-traded funds.

Now, for the first time, you can buy foreign currencies just like you would any other exchange-traded fund — like any ETF traded on the NYSE or Amex. It gives you the purest possible protection against the falling dollar. And it gives you the simplest single way to profit with the currencies that are soaring against the dollar.

Tom: What are the advantages of using these ETFs as compared to other things like futures or Forex?

Jack: One of the major benefits is that you can get in for such a tiny investment: You can buy a currency ETF for $100 or even less.

Tom: That's amazing. Years ago, you needed a million bucks to start trading currencies. Now, I can start investing in several of these with just a few hundred bucks?

Jack: That's right. Another advantage is the yield . If you were to buy, for example, an Australian dollar ETF or the British pound ETF, you'll get yields in the five or six percent range, possibly even more … especially given the fact that those central banks are in hiking mode. They're raising interest rates.

The Fed can't raise interest rates in the U.S. because of the housing crisis. So the most you're going to get in yield here is what you have been getting. In fact, they're even talking about lowering interest rates. That means the yield you get on your money markets is going down.

Tom: Going down? You've got to be kidding! The yield I can make is already too darn low. And now you're saying it's going to go even lower!

Jack: Not if you take advantage of these currency ETFs. Whatever they earn in yield, they pass right along to you in the form of regular dividends.

Tom: That's excellent. I really like that.

Jack: Yes, but please understand: the yield is just a kicker. It's not the main advantage and not the primary goal of currency ETFs. The main advantage is that every time the dollar falls, you can make a small fortune.

Martin: Let me put this in perspective: If you're riverboat gambler, go to the futures markets and trade against the big speculators and big commercial interests. Or go to the spot currency market and trade against the big money center banks and governments around the world.

Tom: Well, I like to go to Vegas once in a while, but no, I'm not a riverboat gambler. The first thing I want is protection from the falling dollar. Heck, almost everything I own is in dollars. My home is in dollars. My bank account is in dollars. My brokerage account is in dollars. My wages, my interest, my dividends. Everything is dollars. How am I going to sleep nights with the dollar falling like this? I need to protect myself. And I need to do it now! The second thing I want is a real, solid wealth building opportunity. Solid returns. Year after year.

Jack: Then don't go do futures.

Annualized returns of 41%, 44% and 48% …

Tom: And the good thing is I don't have to. Your research department has just provided me with some numbers, which tell me I don't need futures. I can get everything I need just with these lower risk ETFs. So if you don't mind, I'd like to take a few moments to run through these numbers with you and get your comments. Is that OK with you?

Martin: Sure, go ahead.

Tom: These are examples of how much money you could make in currency ETFs: This year, if you bought the British pound ETF, you could have grabbed a nice gain that's the equivalent of 36% per year on an annualized basis. Add in the yield, and you'd have a total return of 41%.

And here's another example: If you had bought the euro ETF, you could have had an annualized gain of 41%. The yield on the euro is lower than that pound, but I don't think you'd mind that too much. Because your total return comes to 44%.

Larry: Is that the best example on your list?

Tom: No. The best example from this year is the Canadian dollar. Annualized return: 44%. Add in the yield, and you're looking at a total return of 48%. Folks, these are very impressive numbers. And this is exclusively with ETFs, right?

Jack: Right.

Tom: And these ETFs are just like the ordinary ETFs I'm already buying all the time, right?

Jack: Exactly like ordinary ETFs. The same ease of buying and selling. The same access through any online or offline broker. The same low commissions. Everything you like about U.S. sector ETFs, or index ETFs, or international ETFs … you'll like about currency ETFs.

Tom: I love ETFs. I love the fact that I don't get a nastigram from some mutual fund bozo telling me I can't get out whenever I want to get out without some kind of penalty. Plus, I've always been fascinated by the currency market. Now, they've put the two together: Currency ETFs. Could I go online right now and trade them?

Jack: Absolutely.

Tom: Jack, I have another important question: What do you plan to recommend next? ETFs on the currencies I've just talked about?

Jack: Actually, no. It's going to be on another currency, one I'm more bullish on than any of those you talked about.

Tom: Don't keep us guessing. What is it?

Jack: The Japanese yen.

Tom: Because of what Larry said — that their economy is so much stronger?

Jack: Yes. The Asian economies are booming and most of the other Asian currencies have rallied tremendously against the U.S. dollar. The Japanese yen has been the exception. It is, without a doubt, the most fundamentally undervalued currency in the world.

The reason is the Japanese government has done almost everything in its power to keep the yen down relative to other currencies. But now, the Japanese economy is growing nonstop. It's gaining momentum. Its jobless rate just fell to the lowest level in 9 years. So the Japanese are going to have to raise interest rates. The market's going to force them to do it. And when that happens, you're going to see it provide a real boost to the Japanese yen.

Martin: I have a question for you, Jack. What is going to trigger this huge move in the yen?

Jack: It's already been triggered! It's all the things you and Mike talked about — the credit crunch.

Let me explain how that works: Major hedge funds and investors around the world have borrowed money in Japan at very low interest rates — massive amounts to fund their risky investments. The hedge funds have taken all that cheap Japanese money and invested it into all these mortgage in the U.S., and for a while, they looked like heroes to their investors.

But with the credit crunch, they have to reduce their exposure. That means hundreds of billions of dollars going back to Japan — to buy back yen and repay the loans. And that's going to be pure rocket fuel for the yen.

"The amount of borrowing in the Japanese yen is tremendously larger than it was in 1998 when the yen surged 20% in one month. So the potential for a surge today is almost beyond comprehension."

Martin: Is that what happened the last time we had a crisis like this, back in 1998, when Long Term Capital Management cracked up?

Jack: That's exactly what happened back in 1998. We had a very similar situation — also with low Japanese interest rates, also with investors borrowing large amounts of cheap Japanese money. But as risk began flowing across the globe, investors repaid their loans, and the yen just soared.

Tom: How much did it go up?

Jack: It went up over 20 percent in one month , and it kept on rising for over a year.Just to give you some perspective on how much that is, we know the euro has been in a huge bull market. But it has only moved 15% against the U.S. dollar in two years. So you can see the potential for a move in the yen is massive.

Tom: Earlier, based on the numbers your research department gave me, I talked about ETFs that could have given you annualized returns of close to 50%. And you're saying the explosion in the Japanese yen could be even bigger?

Jack: Yes. Much bigger. And one more thing: Today, the amount of borrowing in the Japanese yen is tremendously larger than it was in 1998 when the yen jumped 20% in one month. So the potential for the move today is almost beyond comprehension.

Tom: The other thing I like about this is that the Japanese yen ETF is like any other ETF. I can use my regular broker. I don't have to set up any new account. And I can pay standard discount commissions, even cheap online commissions. Is that correct?

Martin: Correct. And that's why we're launching a new service that's dedicated to trading international currencies with ETFs. It's our new World Currency Alert .

Tom: Yes! I've spent some quality time learning all about your project, Jack. In fact, you and I have been talking about it for several months. So if you'll permit me, let me step in here and give our participants some of the highlights. If I say something out of turn, just jump in, OK?

Jack: OK.

Tom: For starters, you get Jack Crooks' World Currency Trading Manual. In the manual, Jack shows you his #1 strategy for selecting the ETFs that offer you the potential for the greatest returns. He shows exactly how they work and how he identifies the best ones to buy. He shows you how to whittle your risk down to the bare bones minimum.

Martin: I'm a risk-averse person. So I'm really pleased to see this provides several risk barriers: The first is diversification — your investing in the currencies of entire nations, not just a few stocks. The second is Jack's close monitoring of each position, with strict limits. The third risk barrier is the ETFs themselves, the most prudent of all currency trading vehicles in existence today.

And while we're on the subject of risk, I want to remind you of one more thing: One of the greatest risk of all, in my opinion, is being taken by the folks who do nothing to protect themselves from this dollar crisis.

Larry: How much would you say Jack's manual is worth?

Tom: Recently, a currency course, which doesn't even cover the new currency ETFs, sold for $1,977, and thousands of investors bought it. But we give it to you free with your Charter Membership in World Currency Alert .

Plus, the trading instructions in World Currency Alert are so simple, even a sixth grader could use them. With each trade Jack recommends, you get complete, easy-to-follow, plain-English instructions. He tells you what to buy, when you should buy it, and how much to pay for it.

Jack even tells you the steps to take to make the trade online … or … precisely what to say — word for word — to place the trade with your broker on the telephone. And if you ever have a question, you can call our HelpLine anytime.

Larry: So you could just call your broker and read Jack's trading instructions word for word?

Tom: Yes. Ditto for when it's time to take your profits. Jack rushes you an e-mail telling you what to sell, how much your position is worth, the expected results of the trade — and once again, easy-to-follow instructions for executing the trade online or on the phone with your broker.

Larry: And I could sign up today … use World Currency Alert for two full months … and then if I'm not blown away by the profits I can say goodbye, cancel, get for a full refund of every penny I paid for my membership, right?

Martin: Of course.

Tom: I've always been intrigued by currencies, how dramatic the moves can be, how huge the leverage is. But I have always been hesitant because of the unlimited risk. Now, with these currency ETFs, I can do it safely. I also know Jack, and I think he's the best when it comes to currencies. I know of no one better.

Tom: Any other comments, gentlemen?

Larry: This is Larry again. I've been away from the office for a few weeks, traveling in Asia. So a lot of what was said here today was news to me. And I can't tell you how overjoyed I am to hear about these currency ETFs.

I've traded the currency market inside and out, in the futures and in the cash. And I was always amazed that there was no viable way for the average investor to participate without taking huge risks. No one brought together what has got to be the most liquid, most wildly profitable market with the investor-friendly instruments like these new currency ETFs.

I think about George Soros who traded the British pound years ago. He made a billion dollars in a single day. I think about the banks that have been making hundreds of billions of dollars in the currency market. And now the currency market is open to average investors? And with limited risk? That's just terrific.

Editor's Note: Normally, a one-year membership in World Currency Alert is $595 per year. And that's a great value, considering the potential to earn many times that amount just with the yield you get on these instruments — not to mention the huge profit potential when the dollar falls. But if you become a Charter Member now, you can join for 1 year for just $295, and save $300 off regular membership rate. Your cost: Only 81 cents a day.

Or, for an even better deal, join for two years for just $495 and save $695. That brings your cost all the way down to just 68 cents a day!

The number to call is 1-800-393-0189. Or, to order on our secure website, click here for a 1-year membership and click here for a two-year membership .

You must be delighted with the profits World Currency Alert earns you, or cancel anytime in your first 60 days for a full refund of your membership fee — or anytime thereafter for a refund on the remaining portion of your membership.

Tom: Thank you, Larry. Thank you, Martin and team. And thank you, our loyal reader and subscriber, for participating in this conference. Just remember, you don't have much time to take action — to protect yourself from this crisis and to go for amazing profits. So take full advantage of the knowledge you've gained here today.

Good luck and have a great day!


By Martin Weiss

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

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