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Chief Investment Strategist Keith Fitz-Gerald and I began working together more than six years ago.
And just after we became colleagues, Keith established a routine that continues to this day.
Each weekday evening, about 90 minutes after the U.S. stock market closes, the phone at my desk rings.
I really look forward to those calls.
You see, I know that it's Keith. I know that we'll do a "postmortem" on that day's financial events.
And if Keith has a new prediction – usually accompanied by a new profit recommendation – I know that he'll share it with me.
Indeed, some of the most-profitable research recommendations that I've detailed for you here in Private Briefing have stemmed from those early-evening telephone calls.
And that may include the one I'm sharing with you today.
Let me explain …
During a chat late last week, I congratulated Keith for his bet against the Japanese yen – a Feb. 3, 2012 Private Briefing prediction and accompanying ETF recommendation that has generated a peak gain of 53%.
Keith responded to my kudos by making another prediction – another stunner, in fact.
"Here's the thing, BP … you ain't seen nothing yet," Keith said. "The second phase of the trade has yet to begin. Once it does, I think we're looking at another 50% to 75% on top of the existing gain … before everything plays out."
You read that correctly. With a 50% gain already in the books, Keith believes we could see an additional run that would bring the total gain to as much as 125%. So even if you missed the initial profit, it still might be worth taking a look at this recommendation.
What's more, because this investment is tied to Japan's economy, its central bank policies, and that country's currency, it's a nice way to diversify some of your money away from a lofty U.S. stock market, which had its 10-trading-session winning streak snapped on Friday.
Just so you can remember the basics, allow me to explain how this recommendation first came about. As I recounted in that Feb. 3, 2012 Private Briefing column, Keith and I had been talking about the economic woes of Japan, a country he knows very well because he lives there for part of each year.
I was crafting a column based on our talk. But I wanted to be able to tell you how to profit from the predicted yen tumble, and knew that Keith could identify the best strategy.
And he did.
Keith told you to bet against the yen by investing in the ProShares UltraShort Yen ETF (NYSE: YCS) – an ETF that's designed to rise in value as the currency declines. But he counseled patience, telling us it could take a few months for the yen to begin its slide.
A year later, that ETF has soared as much as 53%. We even discovered that the yen-shorting trade became one of the hottest profit plays on Wall Street late last year, with such noted icons as billionaire George Soros making billions as Japan's currency fell.
But, as we told you a month ago, because Keith spotted the opportunity as much as eight months before the Wall Street "pack" – and before the yen began its skid – his 50%-plus return is more than double the 20% profit that Soros and the rest of the hedge fund fat-cat pack were reportedly reaping.
And now he's saying there's an-even-bigger yen decline in the offing – meaning there's an opportunity for a still-bigger profit.
"What's really amazing, BP, is the fact that there's even more potential in the long-run – for two very good reasons," Keith explained. "First, the fall so far has been based on a perceived weakness in the U.S. markets and the need to hold down alternative currencies such as the yen. But with the United States seemingly making progress in digging its way out of the hole it dug for itself, the tables are turning and capital is moving away from the yen."
And the second?
"The new head of the Bank of Japan (BOJ), Haruhiko Kuroda, is making a lot of noise about the central bank needing to be very aggressive when it comes to unlimited purchases of longer-term debt," Keith said. "Kuroda actually believes he can stimulate his way to higher growth and the 2% inflation target the BOJ wants to hit."
Good luck with that.
In fact, one pundit stated that it will require an "obscene" amount of stimulus for the Japanese economy to get anywhere near that 2% target. And that much stimulus is going to crush the yen.
It's already happening, Keith says. Technically speaking, the Japanese currency has already broken through several key "resistance levels." That points to additional weakness.
And as the yen plummets, the UltraShort Yen ETF will skyrocket – just as "Sherlock Fitz-Gerald" predicted.
"If all goes as planned, I think the Yen will ultimately drop to 150 or even 200 to the dollar before this is done, potentially delivering as much as another 50% to 75% on this trade," Keith told me. "The key, however, is that you have to be patient … it could take some time for this to play out. But investors will be well-compensated for their time if it does."
If you think that Keith's "be patient" comment is a form of equivocation, you can put that worry to rest right now. He said the exact same thing to me when he made the initial recommendation a year ago. We saw an initial decline (and a 20% surge in the UltraShort ETF), then the yen held steady for a couple of months.
When the yen started its plunge, the ETF skyrocketed – it's still up more than 50% from where Keith first recommended it.
Expect the same pattern with this second phase of the yen-shorting trade, Keith said.
"This is a trade for patient people," he explained. "An investor needs to understand that they're not only playing against traders, but also against central bankers all over the world. So the trade has probably a 12-month time horizon. In the first phase of the trade, the target was the yen trading at 95 to 100 to the dollar. Now we're looking at 120. If the yen goes there, all hell will break loose in the currency markets. But it doesn't invalidate the trade."
But this time around, Keith was ahead of Wall Street's biggest players.
And thanks to him, so were you.
[Editor's Note: Unless otherwise stated, we recommend investors employ a 25% "trailing stop" on all holdings.]