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Getting back on track and looking forward

We are seeing some good short-term swings in many of our markets, which I hope many people are exploiting. Fortune favours the brave, especially the last couple months of the year.

In the Forex realm, the strength in Euro has been quite impressive, but I can’t get behind it.

Indeed, from a speculative or a hedging prospective, I would be interested in being short of EUR/USD anywhere around 1.10 and be happy to sit on it as we move into the New Year.

I will leave the more technical aspects to others, but for me, things will start to get even worse for Germany and that doesn’t bode well for Euroland in general. And, whatever you think of the next American President - whoever that proves to be - most people will be happy to see the back of Joe Biden and hope to see many of his disastrous economic policies reversed.

It is a sad indictment of the state of democracy in Europe, that we cannot see a change in EU fiscal policy coming anytime soon, no matter who gets into office.

On top of this, the introduction of a CBDC in Europe, as much as we don’t need or want it, seems inevitable, and will probably begin this side of the pond before the other, where the electorate will be much more vocal in their opposition.

Anyone who believes any politician has thought through the full repercussions of introducing a digital currency is crazy. It has nothing to do with improving our financial security, and everything to do with taking control of our wealth and controlling our spending. It is an ideological move aimed at taking away our freedoms “because politicians know better than we do!”

I have heard a few explanations of how CBDC will affect investing, especially short-term investing and speculating, but I can’t see how CBDC will impact digital currencies positively.

So, that said, we will still want to store wealth and hold assets we can barter outside of government interference, and the options are limited.

Many are promoting the virtue of holding BTC, or a few other blue-chip coins. And whilst they may be correct, my preference remains physical gold and silver, so I will weight my portfolio accordingly.

Don’t misunderstand me, crypto purchased at the right level (whatever that proves to be) will still offer some security, but the industry has sold its soul to the giants of the investment world, and that doesn’t sit with me too comfortably.

The other reason for my interest in precious metals is noises coming from BRICS about creating an alternative to the current Reserve currency, the dollar, and backing it with tangible commodities. Gold, Oil, etc...

There will be a very long way to go before the diverse members of the BRICS come to some conclusion on this matter, but the closer it gets, the more underpinning we will see of certain valuable commodities.

Inflation and interest rates - something I am not an expert on - is being debated widely, and the general political consensus across the West is that we need to get back to a paltry 2%. I do not know which computer first spewed out this “ideal” 2% rate, but in practical terms, I think it is a case of “shit in, shit out” when it comes to this particular equation.

I like a bit of innovation, but when it comes to this targeted 2%, our western bankers and politicians seem to have a King Canute complex, with a strong self-belief that they can alter nature. If it was their money and wealth, I would be a cheering onlooker, sitting on the shore with my picnic, watching as the economic tide ebbs and flows. But it’s not their money, they are losing, it is ours, and that doesn’t sit with me too well.

How much of our money and wealth has been wasted on poor government economic policies over the past few decades is beyond me, but the thought that this patch of politicians have a solution is just madness! Let’s be honest, if these people where any good at financial matters, they wouldn’t be politicians, or we wouldn’t be in the mess we are in!

There is that old saying, “don’t bring me your problems, bring me solutions”. but it is hard to solve a fiscal problem when the solutions are financial, but those who have to implement the solutions are more interested in promoting ideologies and agendas, than they are the well-being of society.

I am not too hopeful for any economic improvement next year, as the days of kicking-the-can-down-the-road, appear to be coming to an end. Moreover, unlike many economic shocks that the world has suffered in the past, where the West has run in to help,  I do not expect the West to be bailed out by the new global powers.

That said, and I have said this in various previous reports, those of us comfortable with hedging and speculating still have the tools and instruments at our disposal to benefit from next year’s upheavals. And we have to make the most of the opportunities presented to us.

I will offer my ideas as and when, and actually look forward to discussing and debating many of the events I expect to occur next year.

It may not be what we want, but at least we might be able to have a few laughs on the ever-winding journey!

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