Goldman Sachs: US bond market underestimates inflation.

Here's the article I am referring to.  Note what Goldman's boy says: "in the U.S., consumer prices should start rising even if oil stays flat, Ardagna said. That’s because inflation has accelerated in corners of the economy that are shielded from the decline in energy costs and international economic pressure.  In one example, the October U.S. employment report showed the sharpest yearly rise in average hourly earnings since 2009."

The economically well read will recognize this as the early stages of what Jim Sinclair has been telling us about for YEARS now, his so called "cost push" inflation.  In other words, input costs will push up the prices of things.  I guarantee you that WMT, for example, is not going to take very many quarters of shitty profit collapse.  They will raise prices as soon as they think they can get away with it.  When their input costs go up they will raise prices but their customers are price sensitive and revenues will drop.  It is not going to be pretty for retail but gold miners on the other hand are shortly to be rediscovered.  That yellow colored pet rock will turn out to save the retirements of those who are wise enough to hoard the useless yellow brick.  I swear, the person who wrote that pet rock article should be tarred and feathered for stupidity.

One thing is for sure: deflation never lasted forever.  That's because the fiat currency is a lot like an option: it has time value built into it and because of this feature it marches its way toward zero. Whereas the likes of JNUG and UVXY have to do reverse splits, the fed also does incremental reverse splits with the fake money.  We call it running the printing presses and it is done for the same reason that the controllers of JNUG and UVXY and every other leveraged gambling vehicle has to. You are going to laugh at this but if you look at the data you will see that I am right.  EVERY fiat currency eventually goes bust because no confidence game ever lasted forever.  That's right folks.  The time value of the fake money is simply how long does it take for gullible sheeple to finally understand that the fake money has no intrinsic value. When, not if.  When is built into the fabric of fake money.  So few see it but the fact is that it simply is.  Period.

Well, I've been looking at the velocity of money wave chart and It has been in the final stages of a 5th wave down for a number of quarters now.  I don't see the chart turning up yet and I will be sure to let you know when I do.  But it might happen faster than many think.  Below we have the 10 year treasury yield and I think that the head and shoulders scenario is dead.  In other words, I think the cyan path had its chance but the market rejected it.  And in fact I think it was never going to happen because the neckline is so badly formed.  I find that H+S are much rarer than many traders like to think. 

So I think this falling wedge that has apparently been in place since 2009 is going to fail by having interest rates gap up and out of the top rail as shown.  Maybe not tomorrow but probably within the next 3-4 months.  And when that happens the market is going to do just the reverse of what everyone thought was going to happen: it is going to do an INVERTED H+S breakout to the upside (see how the top rail of the falling wedge is a much better neckline)?

This is going to take everyone by storm.  Needless to say, rising interest rates will make the herd switch from deflationary thinking to inflationary thinking and that cannot be bad for metals, miners and commodities.

More than anything else, the interest rates will control the markets because without cheap debt fueling the debt Ponzi, the game is over.  Get your mind straight about that please.  It IS a debt Ponzi and there WILL be a collapse at some point and that point will likely be before most boomers can get their money out of the big scam.  This is the true fundamental of these markets.