Disclaimer

Investing involves some degree of risk. Investors should inform themselves of the risks involved before engaging in any investment. I accept no responsiblity for your failures as an investor. Disclosure - Long physical Gold, Silver, and mining companies.

Monday, July 20, 2009

***Warning****** No green shoots!

Is this the beginning of the recovery? The answer is NO! What your seeing is the result of inflation - i.e. the excessive printing of money. The "green shoots" that your seeing is inflation at it's finest. Don't be fooled and don't get caught in the bear trap stock market. I will explain this one last time. When a government or quasi agency (Federal Reserve) prints excessive money (also called monetization of debt or quantative easing), it will lead to consumer price inflation in about 2-3 years. The experiment currently being conducted on the economy is attempt to re-inflate asset prices, but the main problem with this experiment is the adverse effects it will cause. The re-inflation process will happen in a failed sequence. Write this down and watch the shit hit the fan. 1). Watch the US Dollar Index closely. It's currently sitting at 78.88. If it starts falling towards 72, this should cause great alarm and panic whistles and bells should be sounding everywhere. The US Dollar Index will not go straight down. It will roller coaster down. 2.) The stock market will appear to rally as the US Dollar Index heads towards 72. This rally is fake as they come. It will not be based on market strength, but rather a weakness in the currency which it is traded. Keep your eye on the ball - US Dollar index rather than the stock market. The stock market will hit a point on the upside where it's extremely overvalued compared to the currency which supports it and a violent correction to the downside will occur. 3800 to 5200 on the Dow is my price target, but much lower is not out of the question. 3.) Once gold breaks 1,000 for two consecutive days, it will run up to 1,600 very quickly. Silver will lag and target 26 or higher. 4.) If 72 is broken on the downside on the US Dollar index, the currency will have failed and must be replaced. A "new" currency will be issued with an exchange of 3 old to 1 new. 5.) A "bank holiday" is imminent. No ATM withdrawals, checks written or cashed, or credit card transactions. Once again, watch the US Dollar index as it approaches 72. A "bank holiday" will be announced on a Sunday which Sunday I do not know. If these conclusions sound extreme, keep watching CNBC and get your investment advice from Cramer and be unprepared for what your about to witness. Be careful and extremely wary of the month of October. September 1 to November 30 are going to be very interesting. Please post your questions and comments below.

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