Fundamentals clearly are not supportive of this market. If one had relied on fundamentals one would have shorted this market a long time ago and by now would either be bankrupt or on one’s way to the loony bin. Hot money drives this market, and the situation will turn explosive when the Fed embraces negative rates… We are in the midst of a massive currency war, and the only option left on the table is to “devalue or die”.
Central bankers knew that people would save more and more out of fear initially due to economic uncertainty even though rates were and still are low. They know that many will continue to remain wary when negative rates hit the U.S. and even when banks start charging them a fee to hold on to their money. People are saving more and more because they don’t know what the future holds.
Experts will state that central bankers miscalculated, but the truth is that they did not miscalculate, they were planning for this. Eventually, when the pain becomes too intense, the masses will realize that they have no option but to speculate and suddenly they will all act in unison. They will jump out of the box and start to look desperately for investments that offer better rates of return…
The idea here is to back the crowd into a corner like you would a rat in a small cage. Finally, when it has nowhere to turn, it will lash out and strike, realizing that its life is at stake. Whether it wins or not is irrelevant, the objective was to goad it into lashing out like a tiger. If the central bankers are successful, they will have created one of the biggest stimulus programs in history, and the masses will be the ones funding it…[While negative interest rates] are counterproductive over the long run, in the short to medium time frames they can produce a helluva of bang and that’s the main objective of the big players…The idea is to create the mother or grandfather of all bubbles. When the masses decide to speculate there will be so much money flowing into the markets that:
- all assets including gold will fly;
- some will soar to the moon,
- some to the sun and
- some possibly to the next galaxy…
The Fed has no option but to embrace negative rates so one’s plan should be to view every strong pullback as a buying opportunity.