Deflation has been the buzzword: time for some sudden inflation? [VelOM]

The current trend is deflationary.  Every money manager is talking about it right now and many have gone to cash because of it.  Everyone is worried about QE tapering.  The worry is that if the fed stops printing money, deflation will take over.  While I do believe that we still have a significant amount of deflation to go through before a bottom is in place, I'm looking at the June velocity of money chart and I see 5 waves down.  Since nothing goes straight up or straight down, perhaps it's time for Mr. Market to pull a sudden, vee style reversal on the velocity of money soon.  Note: the chart below is 54 years worth of data from 1959-2013.  Don't expect any big moves over a month or a quarter.

While this chart seems to be ready to bounce, I see gold and silver bottoming recently and I suspect that these bottoming events coincided with a reversal in the VOM chart.  I don't have a more recent chart for velocity of money so that's just speculation on my part right now but at the same time we see things like fast food workers organizing and asking for nearly a 2x wage increase.  When's the last time you heard anything like that happen?  That's known as cost push inflation - something that Jim Sinclair has been telling us was going to happen at some point.

Keep in mind that the federal reserve's balance sheet has more than tripled since 2007.  The monetary base has also more than tripled.  The reason that prices have not gone insane as a result is that the velocity of money was plummeting like a rock.  But if VOM turns around and starts to increase then it will be doing so on top of a much, much larger monetary base.

Don't be too surprised if some of that QE that Bernanke has been doing finally comes home to roost in the form of higher prices over the next 5-7 years.  By the way, this would jibe with my recent prediction for a higher price for Alcoa Aluminum Inc. which I think has bottomed or nearly so quite recently.  If I'm right about this VOM chart reversal, gold and silver will be the big winners.