Darfot: Because I Too Believe We Are Operating
within a Deflationary Paradigm, I took the position for a long time that once that paradigm exerted itself more forcefully--we would then proceed directly to a massacre in the commodities markets: gold, metals, oil, the softs, etc. Like you, I saw this accompanied by a resurgence in the strength of the USD, as the commodity currencies got thrashed, and the global market place sensed the USA would have to resolve its debt problem through massive liquidation, write-offs, bankruptcies, etc.
While I still think we could get "there" eventually, I am no longer convinced there is a super-highway between the USA rolling back into a Recession--and the anti-Dollar trades getting thrashed.
Why? Well, to begin with--if this economy rolls back towards recession again (which I take to be the first step towards a Deflationary Panic) then Washington is going to re-load the shotgun, along with Japan and China.
This is why my basic, operational view is that we will experience inflation panics on the way to the dark deflation. The US Dollar is going to have to go much, much lower and gold and the metals are going to go much, much higher--before the boomerang of death finally arrives with its predilection to kill every asset class.
But don't mistake me: I am not one of those nuts who thinks "No matter what happens its good for gold." I just take the view there there are some big, rolling waves to ride before this plays out in a Depression.
BTW, I have felt for one month now that the US Economy is headed back into recession. |
