Tuesday, November 26, 2013


I see many analysts lately wondering what the next catalyst will be to send gold higher. Isn't it obvious?

Without fail throughout history, every crisis eventually occurs in markets where excesses developed. From 1990 to 2000 the misallocation was in the tech sector. We all know how that bubble ended.

In order to halt the tech bubble implosion and economic recession, the Fed cut rates to 1% and held them there long enough to create a bubble in real estate and the credit markets. Not surprisingly this is where the next crisis hit.

Panicking at the 2009 bottom the Fed again resorted to the only game plan they know and begin printing money at absolutely mind-boggling rates. This has continued nonstop ever sense and along the way virtually every other major economy in the world jumped on the printing train.

Isn't it obvious where the excess is? It's in the currency markets. And just like every other time in history when the crisis hits it's going to hit where the excesses occurred. The next crisis is going to be in the currency markets.

It began last year with the Japanese yen.

The next in the line to get in trouble will be the US dollar at its three year cycle low, due in the fall next year.

After that I expect rolling currency crises as one after another of the major global currencies begin to collapse under the strain of insane Keynesian monetary policy.

At the moment it seems to be fashionable to use the commodity markets has an indication that deflation is taking hold in the world. Nothing could be further from the truth. As a matter of fact we have massive inflation right now. It's just that it is being stored in the stock market, bond market, and to some extent in the echo bubble in real estate. Once the inevitable currency crises began, inflation will start to drain out of stocks and bonds and into the commodity markets.

Let's face it, it's obvious where the next crisis is going to occur, and currency crises are not deflationary. They are massively inflationary.