The Euro’s “Hidden” Bear Market

Given today’s commentary from Chris Weber, it’s worth updating our big “myth busting” idea regarding the pan-European currency: the euro.
Most folks don’t realize that the nations of Europe form a larger economy than the United States’. Europe is China’s largest trading partner… and a huge chunk of the global economy. So it’s vital to monitor Europe’s slow-motion financial train wreck (aka “sovereign debt crisis”).
One of the big myths in the marketplace is that despite the region’s problems, the euro is holding steady right now… and even trading near a yearly high. We say, look again…
The euro is plummeting in value. You see, the problem with conventional euro price quotes is they value the currency against other weak paper currencies, like the U.S. dollar and the British pound. Gold, on the other hand, is “real money.” (We’ve even called it “the greatest currency trade of the millennium.”) But it’s not used in the conventional calculation.
Regular readers know we don’t have much use for convention. That’s why we point out how borrowing costs in debt-burdened countries like Spain and Italy spiked to multi-year highs yesterday. This news helped send the euro to an all-time low versus gold. The debt contagion is spreading… and this bear market will continue.