First Stop for “Exotic Profits:” Poland

By Jack Crooks

Poland has been on a tear.

It joined the European Union in 2002 and has received a massive influx of foreign investment as Western European corporations took advantage of Poland’s, centralized European location, educated but much more affordable workforce, as well as the country’s many tax incentives for investment.

For nearly the entire decade, Poland’s economy has averaged growth of 6% a year — more than twice the average of most developed economies. Not surprisingly, that strength has shown up in its currency, which more than doubled between 2001 and 2008.

But now, that story is changing. And Poland’s currency is about to head in the other direction with a vengeance.

The Party is over for Poland

Long-time readers of my trading services know that I have been bearish on the British pound and the euro for the last few months. I also  predicted the U.S. dollar will rally against both throughout this year and well into next.

How is this possible — with all the problems we have here in the U.S.? Simple, Europe has many of the same problems but they’re later in the business cycle.

They are only now beginning to get hammered with the collapse of housing prices (especially in England, Ireland and Spain) and the fallout of massive amounts of bad debt. Plus, on a purchasing-parity-basis, the euro is overvalued versus the U.S. dollar by a third.

The likely result isn’t hard to figure. The euro is euro trash for the foreseeable future. More importantly for our emerging markets trade, as Europe could soon be heading into a major recession, that will impact emerging economies like Poland that much harder.

Already growth is starting to slow down dramatically in Eastern Europe. As these countries enter recession, the hit to their currencies is likely to be significant.

I expect Poland’s zloty could be entering a prolonged bear market — with the kind of persistent, long-term trend that savvy traders can turn into a fortune.

Already, we have gains of 1,010% on our one zloty trade so far. But I expect we will have many more profitable trading opportunities ahead as the global recession hits emerging economies the hardest.

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