The Bear Market in Paper Money Continues

As we expected, the euro is taking a swan dive right now…
 
Regular readers know one of our top trading ideas for 2011 was to short the pan-European currency, the euro. Europe has been heavily involved with socialism for decades. But as Margret Thatcher once warned, the problem with socialism and massive welfare spending is that eventually, you run out of other people’s money.
 
#-ad_banner-#Back in late August, we highlighted the euro’s “compressed” state. This is a situation where an asset‘s day-to-day volatility gradually dries up and the highs and lows move closer together. These low-volatility periods are often the calm before a storm. We expected to watch the euro’s compression resolve itself to the downside… which it has in a major way.
 
As you can see from today’s 18-month chart of the euro, the official currency of the world’s largest economic zone is plunging. The euro just broke a major support level to strike a multi-year low. This paper-money weakness is bullish for gold… and a continuation of The Greatest Currency Trade of the Millennium.