A Black Swan Event in Gold

Nassim Taleb (or at least I assume that's who wrote the article because it's written by Black Swan Capital) talks over at SeekingAlpha.com about his perspective on gold. He thinks that the rising risk to the Eurozone will knock the euro off its feet and into next week -- thus sending gold into an upward spiral. He shows tons and tons of charts that point to the fact that the recent uptick in interest in the Swiss franc, the US dollar, adn gold point to some serious trouble lying ahead for the Euro. His conclusion?

For now, we sit squarely on the fence, pecking away at seeming near-term opportunities. But, if yield spreads continue to blow out in Europe, a new big trend lower in the euro will likely resume and gold will likely make my esteemed father-in-law a very happy man. 

The SPDR Gold Trust (symbol GLD) is an ETF that makes it easy to play the price fluctuations in gold without delving into the futures market. Perhaps a consolidation is in order as gold challenges its all-time highs; either way a blast through resistance looks to be in order. 

Additionally, if Soverign Default in Europe reignites the risks to the eurozone banking system, as discussed today and more in-depth in yesterday's post, then the easiest way to play it outside the FX market would be through the ProShares UltraShort Euro Fund (symbol EUO), an ETF that gives investors to 2x leverage and allows them to essentially be "short" the euro without having to "sell short" a security.

Quick, a little lesson in trend following! Spot the trend. In what direction is the current trend on the Euro?

Scary stuff going on out there. Only one way to deal with it. Ride trends up and down and benefit whether the stock market goes up to the moon or gets absolutely, positively clobbered. If you haven't seen it yet, you should check out my free video walking you through a trend following strategy that you can use to make money whether a stock goes up or down. Sign up to receive the free video right here.