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.
Precious metals prices opened amid mixed price trends this morning, reflecting on-going uncertainty and unease in all markets. Spot gold dealings got off to a rocky start, despite a sizeable slide in the US dollar overnight.
The warning bells are going off not so much because an intermediate degree correction has begun, those happen like clockwork about every 20-25 weeks, but because of how quickly this daily cycle has topped - in only three days.
Japan's economic outlook now appears far more dire than I anticipated only a day ago. It looks like GDP growth rate is going to instantly flip from +2% to -3%, a swing of -5%, similar to what we saw after the Kobe earthquake in 1995.
Humans, for whatever reason, tend to project the past into the future. It is an emotional flaw in our genetic makeup. It is also the reason why so many otherwise intelligent people miss the big turning points in the economy and stock market.
The gold price rose further in Asian and London trade for dollar investors on Thursday but edged back from yesterday's new all-time highs vs. the euro and Sterling as the US currency slipped on the forex market.
For the faithful who have crossed the desert and suffered the slings and arrows of critics and the ridicule of non believers, gold's move to an all time high of $1,276 delivers the greatest of all vindications.