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James DiGeorgia, Mr. Macro
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Gold and Energy Advisor's Real Wealth

Real Wealth #261  06/04/2010



Now Hungary: Sovereign Credit-Default Nightmare Spreads

Dear Subscriber,

 

The growing danger of the European Sovereign Credit-Defaults are spreading and as a result credit-default swaps on sovereign bonds surged to a record thanks to worsening situation in Hungary. The current government in Hungary is calling the country’s debt situation a “very grave situation” because a previous government lied about the economy.

The cost of insuring against losses on Hungarian sovereign debt rose sharply by 63 basis points to 371, according to CMA DataVision at 3:30 p.m. in London, after earlier reaching 416 basis points. Swaps on France, Austria, Belgium and Germany also rose, sending the Markit iTraxxSovX Western European Index of contracts on 15 governments as high as a record 174.4 basis points.

Meanwhile the Euro has broken below the key support level of 122. Keep in mind while the Euro has been dropping, gold has been holding steadily actually up $10 today as I write the Real Wealth column. Gold’s resilience in the face of climbing dollar is symptomatic of the underlying problem which is – Things are not getting much better here in the United States. Today’s deeply disappointing unemployment numbers showing the major job growth coming from Census Worker jobs is fueling fear of a double dip recession.  That’s why the stock market is down by 270 points at this point today.

Over the past few years I have beat the warning drums alerting you to the danger of a monetary collapse. My critics argue it can’t happen. Faced with a worldwide economic collapse the Federal Reserve and Central banks of the world will print money and provide an environment that will feed broad economic growth. In fact that’s the road we have been traveling already for the past two to three years. The problem of course, if the economic nightmare worsens instead of improving, dramatically increasing the money supply becomes a crisis in itself – the risk of a worldwide monetary crisis increases.

In its defense in recent months the Federal Reserve has withdrawn about 7% of the money it injected into the system, so its clear Bernanke understands the dangers. He and the Federal Reserve may be forced by the expanding Sovereign debt crisis in Europe and the clear danger of double dip recession to reverse course and turn the printing money again. If this happens my prediction of $1500 gold this year will most likely be realized.

If you’re not holding at least 15% of your investment portfolio in physical gold you’re in my opinion great danger. For more information on gold please call TOLL FREE 1-866-697-4653. Remember you CAN put physical gold in your self directed IRA. 

Finally, my options advisory service (Gold and Energy Options Trader) is up almost 400% cumulatively this year. We made a recommendation yesterday that’s already up sharply. Every day you’re not a subscriber it is costing you money. This volatile market is perfect for options traders. Go to www.GoldandEnergyoptionsTrader.com for more information.

Best Regards,

James DiGeorgia

Editor and Publisher

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