Wednesday, March 23, 2011

Rolling Black Swans

There appears to be a continuous stream of black swan type events that are hitting the markets week after week.  Most recently it was seen with the Japanese earthquake, today it has moved back to the EU where Portugal is on the brink of insolvency, and tomorrow we will probably move back into the Middle East.

The policy response from central banks and governments around the world to these rolling black swans is as follows:

1. Bail Out
2. Print Money To Pay For Step 1

In this environment we see the FOREX currency markets around the world in turbulence as the fiat paper currencies that are backed by nothing of value continue to rise and fall against each other in chaotic fashion.

In the past I have described it as a large fleet of ships sinking together into the sea.  They are all falling in value together, some are just moving at a fast pace.

So how do you measure something that has no value?  With something that does. 

Gold ran through $1440 today, a new all time record high.


Silver crossed $37, a new 31 year high.


As the chaos continues, our leaders will continue to follow the blueprint laid out in steps 1 and 2 above.

Gold and silver pull backs will be violent along the way.  Stay the course and have capital ready to enter when the opportunities arrive.

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