Some always entertaining and informative thoughts on precious metals (which after weeks of suppression are finally soaring on a sliding USD – the Taper pricing in is over, time to price in the Untaper), Japan, Apple, nat gas and, of course, central planning from DoubleLine’s Jeff Gundlach.
Since we’re dealing with markets that are being manipulated by central bank policies, there is no such thing as economic analysis anymore. All you have is the imaginations of central bankers, and you don’t know what they’re going to do, so you have to be diversified. For the inflation part of the portfolio, silver is the right one because metals as inflation hedges are dead money. They don’t pay anything. You want to allocate as little as possible, while still covering that base. Because silver is the highest beta, you want silver for your inflation protection because you can put less in it, less dead money. I believe if gold doubles, silver goes up 4x. You have twice as much dead money if you use gold instead of silver, so silver is a more efficient way to do it. We’re in a deflationary world right now, not inflationary, though everyone is worried about inflation. The message the markets are saying, outside of the stock market, is deflation. Not surprisingly, silver is down but the Japanese stock market is the place to be.
