Inflation/Deflation

Probability of Deflation Is 60%, Inflation Is 25% and Muddling Through Is 15% – Here’s Why

At the end of last year virtually every every single economist expected interest rates to rise this year as the Fed tapered their purchases and the economy improved but, in fact, interest rates on the 10 year U.S. Treasury have been going down year to date (from 3% to 2.5% after rising from about 1.6% to 3% last year). The masses, going along with this crowd, got fooled but we have been calling for a decline in interest rates for some time now due to world-wide deflation and it couldn’t be clearer to us that this is the most likely scenario for the United States. Let us explain.

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Inflation: What You Need to Know

The March year-over-year inflation rate was 1.51%, which is well below the 3.88% average since the end of the Second World War and 37% below its 10-year moving average.

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Short the Dow & Go Long Gold – It’s the “Trade of the Decade”! Here’s Why

At the beginning of a hyperinflationary cycle, the stock market virtually always makes substantial gains which is just reflecting the sheer weight of printed money...After the initial enthusiasm the stock market loses its lustre and falls in tandem with the economy into a deflationary depression. The U.S. is now slowly entering such a hyperinflationary phase. Here's what that means for the future price of gold.

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These 5 Events Will Lead to Higher Gold & Silver Prices

It is my contention that the move in precious metals...[from] late 2008 through 2011 was largely a result of the expansion in central bank balance sheets and the perceived threat of runaway inflation. Since 2011, [however,] we’ve seen economic growth improve and inflation rates across the globe subside. As a result, investment banks and market strategists are arguing against owning gold, and making the case that, with a lack of inflation and an improved economy, the need for owning gold as an insurance hedge against inflation and currency debasement is no longer present. I strongly disagree.

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Interest Rates NOT Rising Any Time Soon – Even With Fed Tapering. Here’s Why

Everyone and their mom is expecting long-term interest rates to rise now that the Fed is tapering its bond buying programs. I have a couple of problems with this line of thinking because, although it seems like reducing demand for a security (i.e. tapering QE) would result in a drop in price, when you really think about how quantitative easing works this makes no sense and, secondly, the market is telling us this makes no sense. Let me explain.

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Is There a Direct Link Between Rising Inflation and a Rising Demand For Gold?

History clearly shows there is a direct link between inflation and gold demand. When inflation jumps, or even when inflation expectations rise, investors turn to gold in greater numbers. When gold demand rises, so does its price and you can guess what happens to gold stocks. Below is a look at the extent of consumer purchases after inflation (and in some cases hyperinflation) took off in a number of countries.

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