Japanese investors will realize that investing their money in Japanese government bonds is not only a low-yielding strategy, but a dangerous one. Although Japan has been mired in deflation, inflation may return sooner than most think.
Given the still gigantic short positions on the silver futures market, this short squeeze could persist for some time. Increasing price volatility as the squeeze continues is likely and the all-time high of just under $50 /ounce could soon be broken.
If we take all the possible gold/silver ratio's from the past, combined with the assumptions of the physical metals probably available on our planet today, then we could see the gold/silver ratio drop to 10x in the current bull cycle.
Investors who hold a large portion of their liquid wealth in dollars should seriously consider shifting part of these assets into bullion, i.e. physical gold. It is the best way to shield their wealth from debasement of the dollar.
Gold priced in euros is trading near record levels now, but I see little to no downside for gold in dollar terms, as buyers are stepping in with every price dip. Investors are clearly worried about the stability of the global financial system.
We are in the midst of an accelerating stock market decline, with the most important indices dropping below their technical support lines. The S&P 500 has sunk below its crucial 1,300-level, while the Dow Jones has been falling towards 12,000 points.
Although inflation worries have not abated, investors are less worried than a few months ago, which has lowered gold demand as it is a purely monetary asset. Silver on the other hand is a metal with industrial and monetary components.