"Do you have a plan for a worst case scenario, e.g. the Euro really crashes and is given up, most probably followed by a long deflation? The same could be asked for the USD. If you have, what is to be done in your opinion?

"Thanks a lot for your great service."

David Fuller's view Thanks for the feedback and an interesting question certain to be of general interest.

My first point is that the crowd's worst case scenarios, dramatised by the press, seldom come to pass. Therefore I think the chances of the EUR crashing and being abandoned over the medium term are extremely slim. Similarly, I rate the chance of a USD crash this year as even more unlikely. However I can envisage the EUR working its way back to parity against the greenback over the next year or two. I suspect this would suit the ECB, not to mention Euroland's exporters. If you are more pessimistic, I believe gold would be the safest hedge and it remains in form today.

Meanwhile, a soft EUR, which we probably have at least until the USD loses its cyclical safe-haven status, remains positive for Euroland's exporters, particularly those with significant representation in the Asia Pacific region. While this has been a volatile period for equities recently, quantitative easing continues in some OECD countries, short-term rates remain generally low, as do long-dated rates now that the Greek debt contagion crisis has been capped. In other words, monetary policy remains benign and this usually trumps most other considerations. Lastly, commodity price inflation has been temporarily restrained by another bout of deflationary fears, precious metals excepted.


My personal portfolio: USD/JPY long position increased; Platinum long reopened - Persisting with my Baby Steps buy-low-sell-high trading strategy for USD/JPY, I repurchased one of the September contract units sold yesterday, paying ¥92.25, including a 12-point spread-bet dealing cost. This strategy of shorting the yen remains the forerunner for a potential cyclical long play in my personal long-term investment portfolio, which only has a small participation in Japan at present. Until the yen does weaken, I am less likely to increase investments in Japan. Also, that decision would be influenced by the relative timing attractions of Fullermoney secular themes. In other words, if they are strong, I would be content to hold but reluctant to chase. Conversely, a global stock market correction would level the playing field, increasing choice.

Given today's renewed strength in gold and silver I decided to reopen a platinum long today. I paid $1697.5 for a July position, including spread-bet dealing costs of $2.