Gold: healthy correction, huge opportunity for EUR buyers

Recalling the EUR/Gold divergences that we spoke about some months ago, we had a nice one on Friday. It has kept the ratio over the first two days of this week so my take is that it might diverge a little bit more, but it would be wise to start a spread long Gold and short EUR. For those with spare EUR to buy gold or any precious metal (which includes a potentially better buy such as silver), this is a nice entry point.

We are in a correction that has lasted more than a year now. Given the deflationary period we are in, markets might get really funny, but it would be good for inflation to raise over 3-5 percent this year. Otherwise we might enter a hard deflation, where cash is kept within financial institutions, and forced out all at once by central bank printing. That is the case where we get hyperinflation. I don't believe it's coming within the next two years. My take is that in 2013 we will see high inflation, in 2014 will be a turning point in which there will be a deflation and, depending on how hard it is, there will either be another cycle of the same (high inflation for 2015 after central bank printing) or we will enter the final hyperinflationary stage.

Well, there are some people that still rely on their governments. After all, they will always be able to resort to their (tungsten) reserves or, in this case, to something you can really eat