Question:
Hi Scott!
Really value your opinion and would love to get your thoughts on the following..
From what I can have been reading re how the future will play out, it could go either way. Either we all “turn Japanese” and experience a long long period of low/negative rates and stagnation, or at some point the gig is up – rates increase, velocity picks up, massive inflation, unsustainable public and private interest payments, etc etc supernova time. It seems to me that the difference between these is really in “perception management” (propaganda), ie controlling confidence, and with a totally captured media sphere this is something they are good at that. Am I wrong? What do you believe can / will make the difference between these options – you seem sure that the bond bubble cannot continue, but why is this? I mean, even if people start selling, central banks will start buying, and the public will probably be none the wiser. So what will force an end to the crazyness we are witnessing?
Finally! Am currently subscribed to TFmetalsreport.com, best analysis I have found on the gold/silver markets. As I have learned, prices (at least in the short term) are in large part controlled by the HFT machines, which in turn look to the the dollar/yen ratio, and US long bonds rates. Oh, and massive shorting from the cartel, of course (currently shorted to 150% of world silver production…euch..). Have you any thoughts on any of this, and where the dollar/yen will go from here??
Many thanks for your time with these blogs!
Answer:
The answer to your first paragraph is a word that you used – confidence. And specifically what to be aware of is the confidence in central banking. That will go hand in hand with the final top in price/low in yields. As I’ve pointed out several times over the years, in the US the shorter term rates will bottom first and then with a lag of several years (probably six), the 30 year yield will finally bottom. So far in the US, the short term rates bottomed in Sept., 2011. I still own a large position in 30 year US bonds, but I am fully aware of the very long term picture for global interest rates. And please don’t assume that central banks can keep a lid on this forever – they can’t.
I gave my outlook for the $ above and in many previous posts (archived). As far as the yen, I’m still fairly bullish on the yen (stronger yen).
This is absolutely not directed at any of our readers, but in general as far as the websites that have constantly promoted the manipulation obsession for PMs over the years, I find them disgusting. Most of you folks already know my feelings about most of what passes for market analysis on the internet They have cost investors a tremendous amount of money for so many years. Are PMs manipulated – of course they are. So is every market on this planet. Always have and always will. But what in the world does it accomplish to focus on that? Focus instead on how markets truly operate and how to pull consistent profits from them. And when we make mistakes in markets (myself included), we have to take responsibility for it ourselves. These websites are promoting the idea that it’s someone else’s fault. My goal is to persuade people to have the confidence in yourselves that you can do this market thing by doing it the right way. You will be highly rewarded, both financially and psychologically.
And I did a blog post all about manipulation. Here’s the link – http://oneradionetwork.com/archive/manipulators-can-actually-make-richer/.
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