The Topsy Turvy Economy
The news is that the Fed is now more worried about deflation.
Of course their solution is to print money in a different way in the form of buying up Treasuries. It will be interesting watching this unfold over the next 6 years.
Here’s a good article that explains:
http://www.nytimes.com/2010/07/30/business/economy/30fed.html
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THE MARKETS
US Stocks – Short term trend remains down. The next down-draft is expected to be sharp with the Dow falling several thousand points. Downside potential remains historic. Long term trend down though mid 2016. This phase down in stocks will be larger than the 2007 – 2009 decline. It has already started and the public is clueless. I expect ALL world stock markets to fall.
US Dollar – Short term prices are approaching a low. Intermediate term US Dollar trend remains up. This rally could last another year or so. Long term trend down, as is the case of all unbacked paper currencies since the beginning of history.
Interest Rates – Short term rates down but near a low. Long term trend remains up but interest rates may stay in a low range for months, maybe years.
Precious Metals – Short term trend is turning back down or will after one more push up to its recent highs. Long term trend is up. At some point in the future I believe that paper currencies will have to convert to some type of precious metals backing. Or people may just lose faith in paper money. We want to be in silver BEFORE that happens. Interest in silver continues to grow as evidenced by the record breaking Silver Eagle sales and of course the fact prices have been rising.
Real Estate – Down.
The Economy – Down. Deflation will accelerate. Unemployment should ultimately double before this deflation ends. The largest measure of money supply in the US, M3, is contracting at a rate that is only comparable to the Great Depression (see http://news.goldseek.com/PeterCooper/1275321600.php )
Silver Eagles – Get ’em while you can 🙂