The Euro Under Pressure: Europe Losing Economic Competitiveness on Many Fronts

Welcome to the Newsletter: Insight into Finance, Investments, and Precious Metals

In these uncertain times, it's crucial to stay cautious and proactive in managing your wealth. Protecting your assets in the coming period is key. Together, through news and more in-depth information, we can help you make informed decisions under all economic conditions.

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General Overview

• A crossroads between the American and European economies.
• High stock market valuations: The P/E ratio of the S&P 500 stands at 28x, reminiscent of the dot-com bubble era, raising concerns about market stability.
• Geopolitical risks: Significant geopolitical risks and a 35% chance of a U.S. recession in 2025 contribute to increased uncertainty.
• Currency forecasts: Predictions suggest the USD could continue strengthening against the EUR, potentially reaching parity at 1:1.
• Bitcoin nearing $100,000 milestone.

Euro's Free Fall Since Trump's Win

• The euro has been the worst-performing major currency this month. Why? The Eurozone has little to defend itself with:

1. Excessive regulation.
2. Structurally flawed euro.
3. Manufacturing sector under heavy pressure from China.
4. Persistent supply chain issues and high energy costs.
5. A complete lack of innovation and competitiveness.

Germany: Deindustrialization and Economic Decline

• Germany’s economic model is under threat due to:

1. The energy crisis.
2. Rising competition from China.
3. Potential 10–20% import tariffs from a Trump-led U.S. administration.

• These uncertainties are intensifying ahead of elections, further fueling concerns about Germany’s economic future.
• Germany’s decline is evident in stock markets. The total market capitalization of German companies as a percentage of global market capitalization has fallen below 2%.
• Only two german companies—SAP and Siemens—are among the global top 100.

China Surpasses Germany in Exports to Central and Eastern Europe

• This highlights two critical trends:

1. China’s remarkable progress in advanced manufacturing.
2. Serious challenges for Europe’s economic core.

Challenges Accumulating in the U.S.

1. Record debt levels: Total U.S. debt has surpassed $36 trillion, with the government increasing it by an average of $6.3 billion daily over the past 316 days.
2. Job losses: 818,000 fewer jobs over the 12 months ending March 2024.
3. Persistent core inflation: Above 3% for over 40 consecutive months.
4. Bankruptcy surge: 570 large U.S. companies declared bankruptcy in 2024, the highest in 14 years.

Investment Clock Insight

• The “Investment Clock” from Bank of America (BofA) indicates a highly optimistic outlook for commodities in the future.
• As we transition from the "recovery" phase, where equities and lower interest rates are the favored assets, moving into the "boom" phase is expected to drive higher commodity prices.
• Additionally, geopolitical tensions and strategic decisions by countries will contribute to increasing the value of commodities, attracting investors looking for alternative investments with high growth potential.
• Investment cycles, as shown by the BofA “Investment Clock,” suggest that we will likely face high inflation and increased demand for commodities in the future. This will create opportunities for long-term investments in these types of assets.

"Go For Gold" – Goldman Sachs Forecasts Record Gold Prices in 2025

• Goldman Sachs predicts gold prices could reach $3,000/oz in 2025, supported by central bank purchases and declining interest rates in the U.S.
• Gold remains a key hedge against inflation and geopolitical risks, with mounting pressures potentially driving markets further into safe-haven assets.

How Silver's Supply Deficit Will Impact Future Prices

• A silver supply deficit, ongoing since 2021, reflects increased demand for industrial use and investor interest, alongside stagnant production.
• This trend underlines silver’s growing importance as a strategic asset.

Gold-Silver Ratio Since 1869

• The longest-tracked exchange rate, dating back to 3200 BC, stands at 1:84 today.
• This means one gram of gold can buy 84 grams of silver.
• Historically, this ratio suggests silver is undervalued compared to gold, presenting potential investment opportunities.

What’s Happening in Crypto Markets?

• Bitcoin has stabilized just below $100,000, as traders assess whether optimism driven by President Trump’s crypto-friendly stance is overdone.
• Bitcoin has also reached a new high relative to gold, marking a significant milestone in its trajectory.

Top 10 Countries by Natural Resource Value

1. Russia – $75 trillion: Rich in coal, oil, natural gas, gold, timber, and rare earth metals.
2. USA – $45 trillion: Resources include coal, timber, natural gas, gold, and copper.
3. Saudi Arabia – $34.4 trillion: Reich in oil reserves and natural gas.

How to Prioritize Spending?

• The financial pyramid illustrates how to balance spending based on necessity.

1. Base level: Essential expenses like food, housing, clothing, and transportation.
2. Higher levels: Less critical desires like travel and social activities.

• Understanding these priorities helps build a stable financial future.

Best regards,

Peter

The opinions and analyses cited are educational and do not constitute financial advice. I do not endorse or recommend any investments based solely on the above information and recommend consulting a qualified financial advisor beforehand. Investors must consider their financial situation, investment goals, and risk tolerance before making any decisions. I am not responsible for any investment losses that may arise from using this information. For in-depth advice, I recommend consultation via [email protected]