I completely agree that a study of similar historical periods argues strongly for an equity rally. Those rallies in the past have had one year legs but for the moment we must wait to see what transpires.
I am cautious about being bearish on equities right now. Models of 1873 and 1929 show humdinger rallies during the worst of these periods.
The most likely time for a rally to occur is when Obama starts the nation's two trillion fiscal stimulus which will trigger the $8.5 trillion bailout of the system, starting an inflation few people can imagine.
No lender will fail to loan on a government contract that probably guarantees payment.
Over time this fiscal stimulus will be famous for only one thing - triggering hyperinflation.
Gold's rally then can be quite long term, as in more than three years.
Gold will trade at $1,650 but I am sure even that number could be very low. Reasonable people are saying $3,000 to $5,000.
Base metals are not staying as low as they are now in a hyper-inflationary environment.
Gold as honest money will lead everything.
When the fiscal stimulus fails to establish a sustainable recovery, it will have pulled the trigger for hyper-inflation. This is a currency event, not an economic event.
Regards,
Jim Sinclair
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