The Best Economies in Europe

Following in the Footsteps of the "Millionaire Maker?" Over the last 57 years, one stock has created more millionaires than any other. Today, we've found one that could give it a run for its money. To find out why, click here for our special report. The Real Safe-Haven CD to Protect Your Lifestyle By Jeff Opdyke, Editor of The Sovereign Individual Dear Sovereign Investor Subscriber, It's no secret that I see great value in Europe these days, as I've written time and again to Sovereign Individual and Sovereign Investor subscribers. As a hardcore contrarian, I am forever looking where the masses are too fearful – or too blind – to tread. So, I spent last weekend with my computer, a spreadsheet and a mound of economic data building a model of Europe. My aim was to score and rank 33 major and minor European countries on the fundamentals that make a place a good spot to invest. The results clearly divided Europe into three layers. Advertisement The Extinction of America's Middle Class? One of the first financial research groups to warn investors about the global derivatives crisis is now warning of an even bigger crisis – one so big, it will thrust America into a cataclysmic new economic era! But even as America unravels – and it will do so virtually overnight - there are still ways you could shelter yourself from the coming fall-out – even profit from it… and not just in financial terms but in many other ways as well… To learn more click here. The economic dregs like Spain, Italy, Portugal and Greece that you would expect, populate the bottom … then, there was a middle layer of largely OK to questionable economies ranging from the Czech Republic and Germany to Croatia and France. And at the top was what I'm calling the E6 – the six fundamentally strong economies inside Europe that are poised to do well. One of them – a lightly indebted, euro-based economy growing surprisingly fast – will be the subject of January's Sovereign Individual because of the opportunities it represents. But there's one region I want to tell you about today because it is so often overlooked … and because it has some of the best currencies to own today. The Three Top Currencies in Europe … And Not One is Switzerland I don't pretend that Europe is easily repairable – though I do contend that it will be fixed without the death of the euro. And I realize the place remains a mess. The latest economic data, such as manufacturing activity, suggests the ongoing recession is potentially deepening. Even mighty Germany is finding the path more troublesome than before. But there are some bright spots across the region. And one of those spots is Scandinavia – minus Finland, which is in the middle of the mediocre pack. I'm talking about Norway, Sweden and Denmark. They're faring much better than the rest of the Continent, and show up as numbers two, three and six in my list of E6 economies. In the past, whenever there was a crisis in Europe, investors used to dive into the Swiss franc, one of the strongest currencies in the world, backed by one of the soundest economies. But the franc is no longer the option it once was. The Swiss National Bank – fearful of the effect an overly strong currency imposes on an export-dependent economy – has essentially capped the franc's rise against the euro. The other major currency in the region, the British pound, is far from being a safe haven. Besides carrying a massive debt-to-GDP ratio of 85%, the U.K. seems to be slipping back into recession – and in my scoring system it shows up near the bottom of the mediocre pack of countries. As a result, investors have had to find other safe havens in Europe. So, they've headed north to Scandinavia. You can see it in the numbers. This past week, the euro reached a 12-year low against the Swedish krona, and a nine-year low against the Norwegian krone. Investors are flocking into Norway, Sweden and Denmark because, as economies, they all have healthy balance sheets, low debt-to-GDP ratios and the highest credit ratings. Norway and Sweden offer higher interest rates than the euro zone, with key rates in both countries at 1.5%, double the 0.75% on offer in the currency bloc. With the ECB likely to keep cutting rates, money will keep flowing towards the Scandies. Those countries are also outperforming their neighbors in terms of growth. Unlike the euro zone, where most economies are contracting more rapidly than expected, Sweden, Norway and Denmark are still growing. It's true that a lot of the recent strength in those currencies seems to be the result of euro zone capital flight. However, relative to the dollar, Scandinavian currencies still have lots of upside, especially considering that Fed Chairman Ben Bernanke is certain to embark on another round of money-printing. All Three Scandies in a Single CD I know lots of investors right now are content to stuff all their money into dollars in U.S. banks because they feel burned by financial events over the past five years. But I'll say it again: That will prove to be a monumental mistake. Without question, you need some cash overseas to buffer your lifestyle against the structurally flawed U.S. dollar. I'm not saying that just to be inflammatory. Fundamentally, America's fiscal situation – our deficits, our debts, our government's spending and our deeply underfunded entitlement programs – undermine the value of the dollar. For that reason, a prudent saver needs exposure to the safety and security of major, non-dollar currencies. And there are few currencies as robust as those tied to Norway, Sweden and Denmark. They are the European currencies I want to own now and for the long-term. The best option I've found for owning exposure to all three currencies in one basket is EverBank's Viking CD that owns the Norwegian and Danish krone and the Swedish krona. You can see in this chart below the decade-long performance of the Viking currencies in the same proportion as held in the CD: 10-Year Performance of Viking CD See larger image Yes, the Great Recession had a clear impact, but that was a function of every asset class in the world diving at the same moment (and even at its worst point, the CD was still up 10% on the greenback). Over the longer horizon, the chart – and the 30% gain – proves my bigger point: The dollar is structurally flawed, and the Scandies are structurally strong. Ultimately, the Viking CD is a fantastic way to begin putting some of your money outside the dollar by gaining exposure to Europe's strongest trio of major economies and currencies. Until next time, stay Sovereign … Jeff D. Opdyke P.S. There is an economic catastrophe on the horizon that makes having some of your cash overseas even more important than ever. When it hits, it could wipe out a historic level of wealth from those who aren't prepared. To find out more about this coming "unwind" in the U.S. economy – and how you can protect yourself from it – click here for my urgent video report. Related Reading: Where H.J. Heinz is Telling You to Invest Now Why America is Losing the Battle for Business Why a Bet on Zynga Could Have You Hitting the Jackpot It's Time to Get Out of the Dollar RECENT ARTICLES 9/06/2012 The Contrarian Play in Your Morning Coffee While Demand for coffee is growing, supply is shrinking. Coffee prices are set to soar, and Starbucks, SBUX, will suffer - consider selling. 9/05/2012 Where H.J. Heinz is Telling You to Invest Now Follow Heinz's lead and invest in emerging markets. New consumers are growing tremendously and emerging, global companies will profit. 9/04/2012 Profiting From the Other Debt Crisis Japan's government debt has reached epic proportions. So the yen is about to implode. Invest in Japanese companies with profits overseas. 9/03/2012 Why America is Losing the Battle for Business Fewer U.S. immigrants are starting small businesses because of the red tape the U.S. has with it's E-2 Investor Visa program. STATE OF OUR WORLD National Debt Clock: $16,007,697,782,361 BECOME A MEMBER For more valuable information from The Sovereign Society on how to protect and grow your wealth, become a member today. 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