Inflation or Deflation? Indiscernible Direction for Now

As Michael Oliver’s plate tectonic shifts occur, our IDW remains suspended below the 5-year moving average. Oliver’s work suggests that stocks and even U.S. Treasuries are about to begin a major long-term bear market while precious metals followed by commodities will start long-term bull markets. Certainly gold has been on the rise and our gold stocks are enjoying a wonderful run so far in 2016. But due to the Fed’s rhetorical and actual manipulation of the stock market through the destruction of the capital markets via interest rate suppression, the stock market remains suspended at overvalued levels. The S&P is a “dead man walking” as Oliver put it on a recent episode of Turning Hard Times into Good times. The question is whether a new commodity bull market can overtake a plunging stock market. For now the system stays alive. But for how much longer?

My own view is that if the dollar is at the start of a major decline, interest rates are likely to start to rise whether the Fed likes it or not. And with that we could see the start of a serious multi-decade long bear market in U.S. Treasuries, which would start to cause panic in the markets and a loss of confidence in everything mainstream. Donald Trump and Bernie Sanders are evidence of a worn social fiber. The wheels could fall off of this fraudulent monetary machine any time sending gold soaring to infinity. When people begin to realize that the dollar in fact has zero value, Doug Casey’s equating demand for gold to forcing the volume of water roaring over Niagara Falls through a garden hose is not a ridiculous concept. While I own some gold, this is certainly not what I or any sane person could or should ever wish for. Timing for this loss of confidence is impossible to gage. But it will be an eventual outcome that anyone who thinks seriously about the mechanics of our anti-free market monetary system will recognize is a virtual certainty.