Wednesday, April 21, 2010

The State of the US Dollar, the Euro, and the Price of Gold: Profit Up or Down

The latest news from Greece is that the country will accept the E30B aid package (USD $40B or so). This will solve the country's problems this year, and the whole issue will come back in 2011 or 2012. Cutting the deficit they way they need to is simply not possible - without mayhem.

Given that other PIGS countries (Spain, Italy, Ireland, Portugal) are following right behind, pressures will surely continue mount on the Euro. This may force the US dollar higher, in turn bringing the price of gold lower. However, the only way out to pay for the US debt is high inflation. When inflation sets in, gold tends to rise.

What's a investor to do in such chaotic currency world we are in?

Below are straddles, which allow the investor to profit whether the underlying goes up or down, as long as it moves the necessary amount.

These straddles are computed with StraddlesCalc Tool free online tool.


This chart is from INO's tool, Note the buy and sell alerts. You may access the tool here (2 months free for our readers) for any symbol you wish.

Straddles for the USD can be through UUP. Alternatively, you may avoid options and simply buy both UUP and UDN, it is harder but it can work in a trending market (see our past post on this subject).


Buy sell alerts:


Buy and sell alerts:

For the Euro we use the FXE ETF:

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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