Monday, March 7, 2011

Hyperinflation: Stage Two

We have entered stage two of the end game in finance.  What will be termed hyperinflation if no other term is better has just managed to slip into phase two on this:  This phase has gold making massive gains, but giving them up on massive pull backs in equity, all while fiat and the bonds that back them tread water.  Volatility, is steady and high.  Volatility has been the one consistencie in this market for the last four years and this bull market is still running; the bull could be the twenty year bull that takes over for gold in a decade.  How long could this trend continue?  Until people took notice and bought gold, but how low could it go?   Imagine Dow $1k: Gold $1k.  Maybe it only lasts a little while, until people catch the drift and run into the gold pool naked.

Any way this ends, gold will equal the Dow.  Dow $10k and why can't gold be worth ten thousand dollars?  We all know that the effect would be minimal to technology.  Yes things will be more expensive, but oil will be covered.  Oil will trade for gold, fair and simple.

There is only one more act in this drama, and that is when the bonds do not get bought, and the dollar fails as a viable currencie.  So goes fiat into the fancy of history, with its time short lived and short loved.  It will not happen in one day, this finale, but it will not be a drawn out happening.  The Trinity and oil will rise and rise, with equities only wishing to keep pace, and the dollar will drift into nothingness.  There will be little bliss, as all assets will be scrambling for cover.

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