Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy Government PANICs! Sterling Collapses! - 19th Mar 20
Coronavirus Market Crisis - Nowhere to Hide! - 19th Mar 20
Coronavirus Most Likely GDP Economic Outcome for Q1 and Q2 2020 - 19th Mar 20
How COVID-19 Leads to 2008-Style Bank Crisis - 19th Mar 20
Coronavirus Impact on Global Economic GDP Numbers - 19th Mar 20
Bticoin Crash Big Channel Review - 19th Mar 20
Gold is Doing Its Job…Silver Will Come Back as a Safe-Haven Asset - 19th Mar 20
The Chartology of Coronavirus Deflationary Event - 18th Mar 20
Fed Slashes Rates to Zero and Introduces QE in Response to COVID-19. Will Gold Rally Now? - 18th Mar 20
Coronavirus - Nothing to Fear but Fear Itself - 18th Mar 20
The Stocks Bear Market Is Upon Us... Or Not - 18th Mar 20
US and UK Coronavirus Containment Incompetence Resulting Catastrophic Trend Trajectories - 17th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Understand and Profit from Surging European Volatility

Stock-Markets / Financial Markets 2014 Aug 18, 2014 - 05:19 PM GMT

By: Money_Morning

Stock-Markets

Peter Krauth writes: With the Ukraine conflict advancing to new and dangerous territory, Russia refuses to take Western sanctions lying down.

Led by autocrat Putin, the former Soviet nation is striking back, and as of mid-day Friday the blows remained primarily economic.

And that's where I want to focus today...


Each side continues upping the ante, with ever stronger retaliatory sanctions.

Economic skirmishes like this can quickly escalate into all-out trade wars, where even the victors lose.

But you don't have to be another victim. There are steps you can take to mitigate... and profit.

The Aim of the Latest Round of Western Sanctions

The latest round of Western sanctions were aimed at Russian financial, energy, and defense sectors.

It's a vicious tit-for-tat downward spiral with Russia responding with a ban on nearly all food from the West, including fresh produce, meat, and dairy products.

That hurts.

About 10% of the EU's agricultural exports, with a value of nearly $15 billion annually, end up in Russia. Both sides suffer, with Russians having grown used to quality meats and fresh fruits and vegetables and now left with limited alternatives.

Some of the hardest hit in the EU are smaller nations. Greece, for example, trades more with Russia than any other partner. Yet now fresh fruit is being turned back at Russia's border, relegated to rotting in refrigerated trucks.

And in a further nose-thumbing move to the United States, Edward Snowden was just granted a three-year extension to stay in Russia.

But it's what Putin's doing behind the scenes that shows just how serious he is about diversifying away from reliance on the West.

Russia Looking East Will Hit Western Currency

A few months back I told you about Iran's trend toward openness. Its new generation of oil contracts appears aimed at attracting foreign oil partners.

Yet despite the apparent olive branch extended west, Iran has kept its options open, and may instead be looking increasingly east.

On Aug. 5, Putin agreed to a $20 billion trade deal with Iran.

According to Russia's Energy Ministry, the 5-year agreement will have Russia facilitate Iranian oil sales and "cooperate in the oil-gas industry, construction of power plants, grids, supply of machinery, consumer goods and agriculture products."

The deal could lead to Russian purchases of half a million barrels of oil daily, representing 20% of Iranian production and fully half of its exports.

While details of this deal are still limited, I can't think of any reason Russia and Iran wouldn't seize the opportunity to further wean themselves off the petrodollar and settle all transactions in their own currencies.

If you've been following me recently, then this certainly won't surprise you.

In late May, I told you about two major deals signed at the end of a two-day trip Putin had made to China.

The 30-year deal by Gazprom to supply natural gas to China valued at $400 billion made the biggest splash. But perhaps more interesting, and certainly more subtle, was the deal between one of the largest Russian banks, VTB Bank, and Bank of China.

Sidestepping the U.S. dollar entirely, the two agreed to pay each other in domestic currencies for transactions in trade finance, inter-bank lending, and investment banking.

If there's any doubt left in your mind, consider this...

According to Reuters, just last Thursday, as Putin was visiting Crimea (recently annexed from Ukraine), he said Russia should aim to sell its oil and gas for rubles globally because the dollar monopoly in energy trade was damaging Russia's economy. "We should act carefully. At the moment we are trying to agree with some countries to trade in national currencies," said Putin.

It's a trend that is not going away, and it keeps gaining momentum with each new round of Western sanctions.

How to Protect and Profit in Nerve-Rattling Volatility

So how can you protect yourself against a weakening U.S. dollar?

Most obvious would be to simply not hold too much of it and maybe even to short it.

But right now the euro deserves more of your attention. Here's why...

The double-whammy of an already weak economy and the prospects of it worsening from Russian sanctions mean the European Central Bank knows its currency needs to weaken, so quantitative easing is well within sight.

Ideally, that will boost exports and lift inflation somewhat. But a weaker euro typically means a stronger U.S. dollar, at least for a while.

So rather than shorting the dollar right now, consider shorting the euro through the ProShares UltraShort Euro ETF (NYSE: EUO). This fund aims to generate twice the inverse daily returns of the dollar price of the euro, potentially doubling your gains on the euro's downside.

Europe will pursue QE since its currency is still too strong and inflation's nowhere to be found. So I expect a weaker euro to continue, and it's still worth adding some ProShares UltraShort to your holdings now.

Another option is to follow the lead of Russia's own central bank.

Interestingly, as Russia's treating the dollar like a hot potato, it's aggressively building its own gold reserves.

A recent IMF report shows the Russian central bank increased its gold holdings by 1.5% in June alone. What's more, in the five years since 2009, the country's gold reserves have nearly doubled.

The Ukraine-Russia conflict continues to deteriorate. A trade war is escalating and open military conflict between the two countries opening up. Given the Russian snubbing of the dollar and favoring gold, that's a huge thrust pushing the commodity higher. It's a lead that, like the war, will not abate soon.

Source : http://moneymorning.com/2014/08/18/understand-and-profit-from-surging-european-volatility/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules