Tuesday, January 26, 2010

Watch gold collapse now!

Warren Mosler makes and excellent observation today in his blog.

He notes that there has been, for quite some time, the notion that quantitative easing was "hyperinflationary" and markets had been following that script with the dollar weakening, gold moving higher, oil rebounding, stocks advancing and bond yields rising.

Now, however, the reverse is happening: stocks are falling, the dollar is rising, bond yields are heading lower and gold and oil are selling off.

Mosler sums it up...

"Should market psychology turn to the notion that the Fed has no tools to inflate, and we have a Congress dead set against larger deficits, it can all get very ugly very quickly in the race to the exit from the inflation plays (including steepeners) currently on the books."

It will be very ugly indeed, especially for gold, which, more than any other market, is representative of the "hyperinflation trade."

Get yourself some short Gold ETF. (You can find which ones I recommend in my Outlook 2010 report, on sale for $39.95.)

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