Forget Gold... These Are the Two Currency Safe Havens Every Trader Should Consider

[Money Trends with Andy Krieger]( Welcome to Money Trends! If this is your first time reading one of our issues, learn more about us [here](. And if you have any questions or comments, shoot us a note anytime [here]( or at feedback@andykriegertrading.com. Forget Gold… These Are the Two Currency Safe Havens Every Trader Should Consider By Imre Gams, Editor, Money Trends You’d be forgiven for thinking the worst is over for the stock market. After all, the three most popular indexes – the S&P 500, Dow Jones, and Nasdaq – all rallied at the open today. However, if you’ve been following us closely, you’ll know we think the worst is yet to come for stocks. As we mentioned in our last Money Trends issue, cracks are still forming in the economy… Neel Kashkari, the President of the Minnesota Fed, believes unemployment is already as high as 24%. That’s almost as bad as the Great Depression, when unemployment peaked at 25%. Meanwhile, major airlines are losing $40 million-$50 million per day. And out of all U.S. mortgages, nearly 8% are in forbearance. That’s why, in our trading advisory, Andy Krieger’s Big Trades, we’ve been building a portfolio to prepare for further turmoil. We’re mostly long Swiss francs and the Japanese yen, our current safe haven currencies of choice. But why these two currencies? What makes them particularly “safe”? Let’s take a closer look at both popular currencies to figure that out… The Japanese Yen We talked about the Japanese yen briefly in [our last Money Trends issue](. It’s a fascinating safe haven… For starters, Japan has been in a deflationary period for 30 years. They’ve struggled to get their economy firing again ever since their massive asset pricing bubble popped in the 1990s. In a recent Big Trades update, Andy referenced how he knew Japan was in for an economic collapse when the Emperor’s palace had a higher valuation than all of California! (Paid-up Big Trades readers can find that [here]( And yet… due in large part to their tremendous exports and current account surplus… Japan has been buying massive amounts of international debt, including American paper. In fact, Japan is the world’s biggest creditor nation… and the single largest holder of U.S. debt. It holds more than $1.1 trillion in U.S. Treasuries. Despite this, investors tend to pile into the yen when times are tough. For example, when the stock market topped in October 2007, it kicked off a vicious 49% selloff in the Australian dollar against the yen. But this goes the other way too… when investors are ready to cash out of their yen and buy risk assets once more, the yen can collapse in epic fashion. It’s why, for traders, the yen can be a wild ride. The British pound/Japanese yen (GBP/JPY) currency pair in particular has several colorful nicknames… including “The Dragon” and even “The Widowmaker.” Our other favorite safe haven currency right now, the Swiss franc, is more straightforward… The Swiss Franc The Swiss franc is quite possibly the best ambassador for the entire Swiss federation. The “Swissie” – as it’s affectionately known between currency traders – has earned its safe haven status through what has historically been incredibly stable systems of both finance and government. Switzerland has generally maintained very low levels of national debt. It’s also renowned for maintaining political neutrality during times of conflict. So it’s no surprise that the Swiss franc can experience tremendous inflows during times of economic or geopolitical crisis. However, one thing to watch out for is the Swiss National Bank’s (SNB) propensity to intervene with their currency. The SNB has a vested interest in keeping the Swissie’s value down. It helps make Swiss exports more attractive to outside markets. This means that trading the Swiss franc during normal times can often be a bit slow and boring. But when the global picture starts looking rocky, the Swissie can really move. Take the European sovereign debt crisis that kicked off after 2008, for example. Countries such as Italy, Greece, Cyprus, Spain, and Portugal could not repay or refinance their sovereign debt. This led to a collapse in the Euro as investors flocked to the Swissie as a safe haven. Things really came to a head in January of 2015, when the Swiss National Bank abandoned its euro peg… increasing the value of the Swiss franc by 20%. In short, whether it’s economic uncertainty, a pandemic, or trade conflicts, it’s important to understand where safety lies. It’s why we’ve witnessed the Canadian dollar dropping 9% against the yen since February 21… and the New Zealand dollar dropping 6% against the Swiss franc since February 17. When the inevitable wave of selling starts again in the stock markets, look for these two safe haven currencies – the yen and the franc – to be big winners. Regards, Imre Gams Editor, Money Trends Like what you’re reading? Send your thoughts to feedback@andykriegertrading.com. [Money Trends with Andy Krieger]( Andy Krieger Trading 55 NE 5th Avenue, Delray Beach, FL 33483 [www.andykriegertrading.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This email was sent to {EMAIL} because you subscribed to this service. If you no longer wish to receive emails from Money Trends with Andy Krieger, [click here](. Andy Krieger Trading welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. 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