We think Phase II of the global debt crisis is underway, but the epicenter is in Europe, not lower Manhattan. Individual investors trying to track the vectors that move the market will therefore have to brush up on currency effects and global economics. In our view, currency effects push the market around day to day, whereas debt will remain a long-term structural issue until sovereign defaults start to happen.
Gold denominated in euros has been making new highs for more than a month, but it is now making new highs in dollar terms. We think this is a sign of flagging investor confidence in paper money. We are short-handed on Consensus gold plays at this time, but recommend that subscribers look into Iamgold (IAG), a former Consensus name that has high relative strength.