Thursday, May 17, 2012

Merk G10 Currencies Monetary Score

Merk Funds has recently released a white paper entitled "G10 Currencies: A Monetary Policy Analysis" where they analyzed G10 currencies and gave a "Merk Monetary Score" to each of those.

The Merk Fiscal Score and a Merk Economic Score are aggregated together with the The Merk Monetary Score into an overall Merk Currency Score

In this 7-page white paper, they explains their methodology and the Merk Monetary Policy Score eventually ranks monetary zones as follows:

  1. Australia
  2. Canada
  3. New Zealand
  4. U.S.
  5. Sweden
  6. Euro Area
  7. Norway
  8. Japan
  9. UK
  10. Switzerland
The best currencies in terms of monetary policy would then be the Australian dollar and the Canadian dollar and the  worst currencies the British pound and the Swiss franc.

Tuesday, May 8, 2012

Axel Merk: Eurozone Election Hangover

Axel Merk, Merk Funds, published a new "Merk Insights" newsletter entitled "Eurozone Election Hangover" where he discuss the possible consequence of recent elections in France and Greece for the Euro and other currencies.

 With the hangover from elections in the Eurozone lingering, which answer is correct?
    a) A socialist is in charge in France;
    b) Nobody is in charge in Greece; or
    c) None of the above
The good news about a socialist running France is that his honeymoon shall be rather short. It took the previous socialist President Fran├žois Mitterrand two years before he shelved his activist agenda and became a moderate. The market won’t be that patient; that’s why we pick answer c) above: the language of the bond market will be the only language policy makers listen to. The bond market is in charge.
What about Greece? It might be possible to put together a minority government of Antonis Samaras “New Democracy” and the former ruling “PASOK” party that is tolerated by the “Independent Greeks.” Panos Kammenos founded Independent Greeks after disagreeing to the terms of his country’s bailout when he was a member of the New Democracy. In the eyes of the Greeks, Germany and the International Monetary Fund (IMF) appear to be in charge; with anger over yielding to demands of those with money, German flags are frequently put on fire during Greek elections. One way to manage Greece’s future would be to give Greece money with no strings attached, except to tell them that no more money will follow suit. That way, the Greek people will own their own problems and can no longer blame others for their plight. In practice, Greece is likely to fall into chaos at some point, as the country has been unable to achieve a primary surplus, i.e. be able to operate before making interest payments; the question in our view is where the resulting anger will be focused.
What does it mean for the euro? The euro is recovering after a dire Monday morning; keep in mind, though, that much of Asia had a holiday and missed digesting the disappointing U.S. unemployment report; liquidity is low, as London is closed for a holiday. Medium term, however, our bigger concern is that big money, such as the Norwegian sovereign wealth fund, is taking a step back from the Eurozone. As such, the odds of more liquidity provisions from the European Central Bank (ECB) have increased. We believe the euro will underperform other European currencies; note, though, that the world, including the U.S., will remain awash in money. The rocky road will continue as policy makers hope for the best, but plan for the worst. This should bode well for commodity currencies in the medium term; of these, the Canadian Dollar, Norwegian Krone and New Zealand Dollar are currently our favorites.

Wednesday, May 2, 2012

Silver and Gold Chart Technical Analysis by Mike Maloney

Picture from Facebook Profile of Mike Maloney

One way to to protect yourself against a currency crisis is to buy real assets such as Gold and Silver. If you want to time your purchase you can do so with technical analysis.

Mike Maloney, of,  has done just that for his subscribers in April 2012 and he released the video to the general public today. He sees an inverted head and shoulder pattern both for Gold and Silver which is a buying opportunity. The Gold chart has also gone under its 200-day moving average, which has been a great buying signal for 7 times during the 12-year bull market.

He also advices people not to wait to getting invested in Silver and Gold, as you need to be prepared while the price is still low and the real crisis occur. Of course, he's biased since his company sells precious metals,  but I believe he's a trustworthy person.
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