Saturday, October 11, 2008

Get Ready for Hyperinflation...

The Central banks all around the world are desparately pumping money into the sytem , trying to unclog the credit pipe.  At the moment it dosent appear to be working.  But sooner than later, it will.  That is the time when a huge wave of liquidity will surge through the markets of the world.  A lot of this money is currency that has been freshly printed ! Its like a pipe that is being highly pressured in order to unclog it. When it does get released , high pressure liquidity is going to flow through the system.  How this is going to get absorbed and what asset classes will this go into is going to be critical and monetary authorities around the world would do well to regulate this.  My own feeling is , we will see a period of extremely high inflation especially in primary commodities like foodgrains.  Also , I see a sharp rise in the bullion prices , particularly gold.  Currencies will be managed by central banks through open market purchases and sales of gold. 
Makes me extremely bullish on the prospects for gold as an investment going forward.

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