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<p>[QUOTE=&quot;InfleXion, post: 2248153, member: 29012&quot;]Precious metals are up 20-30% on the year in emerging market currencies. This is because their currencies are being substantially weakened, because their stock markets are crashing, because they were artificially inflated with cheap money (vicious cycle reaching fruition). China is devaluing too, and there are negative interest rates in the EU so the USD is strong just by standing pat while everyone else weakens.</p><p><br /></p><p>I do not think the bottom will not be in unless any of the following conditions become true:</p><p>1. The US dollar begins to weaken</p><p>2. Metal exchanges experience a failure to deliver</p><p>3. Market leverage is removed entirely</p><p><br /></p><p>There is a pretty good case that #1 has happened since the Dow touched down to 16,001 and change last week. The psychological 16,000 mark was protected at all costs. Ever since then everything has been going up; stocks, metals, oil, and the USD is strengthening at the same time. One plausible explanation for this is stealth QE providing the market with its fix, and if that is the case, by not advertising that this is occurring (thus not further undermining Fed credibility since they have delusions of a rate hike which has the inverse effect of money printing which QE requires) the world still has enough faith that the dollar is better than the rest of the pigs at the party.</p><p><br /></p><p>Still, the cause of all this deflation was inflationary policy leading markets away from equilibrium. Any attempts to stave it off by more money printing will only make the deflationary pressure grow in the future. At some point there will be a decision point between hyperinflation and default, and in that case you will need to have secured your metal position already or else you will either be left with currency that has no value (USG default) or a currency that is depreciating so rapidly that price discovery becomes problematic.</p><p><br /></p><p>Make no mistake, where other fiat currencies go the USD will follow. As the global reserve currency it will receive plenty of safe haven demand until people finally choose to forsake IOUs for real money.[/QUOTE]</p><p><br /></p>

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