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As global stock markets rally fast and furious, Peter Schiff's decoupling & inflationary thesis continues to be largely validated. Here's a breakdown of the numbers:
Stock Market rebounds off 2008/2009 crash lows:
1. Russia- 79%
2. Brazil- 61%
3. China- 49%
4. Hong Kong- 45%
5. India- 40%
6. Germany- 33%
7. Japan- 28%
8. United States- 27%
9. Canada- 25%
10. UK, Australia- 23%
11. New Zealand- 12%
Despite IMF & World Bank projections of approximately 3% contraction in global GDP and 12% in global trade, world markets are rising rapidly for the moment. Markets continue to ignore rising unemployment numbers around the world, as well as potentially significant problems in Eastern Europe and the Baltics. A slowing in the economic decline, promises of massive IMF lending, and large government spending programs appear to be cheering markets.
Gold/Silver rebounds off their 2008/2009 crash lows:
Gold has weakened a bit lately due perhaps to less risk aversion, IMF dumping of gold reserves onto world markets, and the perception that potential inflation is a problem for another day. Silver, like gold, has witnessed a drop lately, though it is performing relatively well.
US Dollar Index/30 Year Treasury Note:
US Dollar- has dropped 4% since its late 2008 crash high
30 Year Treasury yield- has risen 63% since its late 2008 crash low
The Dollar, despite weakness in most global currencies and strong deflationary forces, continues to slowly drop. The 30 year Treasury yield, considered a benchmark interest rate, is rising fast despite a deflationary climate and massive printing by the Fed.
In his recent Wall Street Unspun radio program, Schiff stated that the rise in interest rates, especially in this contracting environment, may be signaling strong infaltionary pressures below the surface. He continues to warn of a hyperinflationary scenario within the next few years if the Fed maintains its present course. He is also growing more worried that such an inflationary scenario may go global as central banks around the world aggressively cut interest rates. Stay tuned...