The biggest gold move in history!

Gold & silver had the biggest one day moves in history last night. This tells you how precarious the global financial system is right now. Whilst I believe central banks and governments will stem the stock market slides shortly with massive rate cuts and liquidity injections, one thing is now certain – Gold & Silver are going much higher. Effectively to save the financial system and the stock markets, unbelievable amounts of paper currency must be printed by all governments, not just US. This is massively inflationary. We are on the cusp of a global hyperinflation where paper currencies become worth less. All the deflation talk in the mainstream press is true for leveraged assets ie any asset with debt/leverage will deflate but real assets (gold, silver, wheat, oil etc will rise). I have heard this called “U-flation”. Anything you need to buy is going up and anything you own or want to sell is going down.

Triple witching (options/futures expiry) occurs on Friday so I expect wild swings in both directions for most assets in the next few days. Now is not the time to panic sell, nor is it the time to make bold bets on anything. This volatility is best left to professionals. You will have ample time to enter or exit in calmer waters over the coming months. After this week, I actually expect stabilisation in markets through the US elections on November 20th. The Bush administration is working very hard with Band-aid solutions to ensure total collapse doesn’t occur on his watch. Next President of the US is not a job any sane person would want. Unfortunately the short term bandaids make this a much bigger problem in the end.