Gold And Silver Are “Go-To” Assets For Capital Preservation

The new Thunder Report is out. The author reviews the macro economic prospects for 2013-15, based on the long wave or Kondratieff Cycle. In the past, following the Kondratieff Cycle gave a 91% probability on success. It is now signalling that a new crisis is looming on the horizon. Excessive debt is the key driver.

The Kondratieff Cycle is in its last of four big cycles that started in 1788. The end of this large cycle will be characterized by debt reduction through INFLATION and by DEFLATION in the prices of almost everything in terms of gold. That’s why the title of the current edition of The Thunder Report is “Inflationary Deflation”.

From the report:

Excessive monetary stimulus and low interest rates create financial bubbles. Central banks are creating the ultimate bubble in MONEY itself, as they fight the downward leg in this Long Wave cycle.

This is the biggest debt bubble in history. Each time DEFLATIONARY forces re-assert themselves, offsetting INFLATIONARY forces (monetary stimulus in some form) have to be correspondingly more aggressive to keep systemic failure at bay. The avoidance of a typical deflationary resolution of this Long Wave is incubating a coming wave of inflation. This will not be the conventional “demand pull” inflation understood by most economists.

The end game is an inflationary/currency crisis, dislocation across credit and derivative markets, and the transition to a new monetary system, with a new reserve currency replacing the dollar. This makes gold and silver the “go-to” assets for capital preservation.

The author explains how Greenspan and Bernanke’s interventions have contemplated the problematic resolution of the old bubbles, paving the way for the creation of new bubbles. Debt is being piled on top of debt and misallocated capital on top of misallocated capital and the previous equities bubble has moved to real estate/securitised debt and a new one is forming in MONEY itself.

Although “the end game” is not to be expected the coming year, the central point in the research is that we are entering a phase of acceleration of the Cycle’s forces in 2013.


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