Global Inflation: The Next Major Obstacle

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The bottom line is that inflation is at a 10 year high in emerging countries and The Economist says that two-thirds of the world's population will probably suffer double-digit inflation rates this Summer.

One thing we find truly amazing about the markets is that they're much more than just investments. Markets provide a way of peeking into the future, if you understand what they're trying to tell you.

These lessons are ongoing but it's fascinating and like a giant puzzle.

MARKETS TELL THE STORY

Sometimes the messages are pretty subtle. But other times they're major, signaling massive economic, political or geopolitical shifts.

Most interesting is that the markets lead. So it's important to recognize that whatever a market is telling you, it's not going to be obvious when that market gives the signal. The message will become obvious later.Let's take gold as an example. It started moving up in a major bull market in 2001, and it's been rising strongly and consistently ever since. Gold always leads inflation, so it was telling us that inflation was eventually going to head higher. That didn't happen for quite a while, but now it's another story. Plus, gold's been telling us much more...

INFLATION ON THE AGENDA

We've been writing about inflation for a long time and why we thought it was coming back in a big way. As the years passed, the evidence became more overwhelming...

What's coming is higher inflation and it could prove to be more serious than most people think, at least based on what we're now seeing.

NOW IT'S HERE...

Suddenly, there's a lot of talk about inflation in official circles and that wasn't the case before. But over the past couple of months, comments or inflation warnings were made by the Fed, the European Central Bank and the Bank of England. Government officials are speaking out, and so is the press. The International Monetary Fund was the most direct, warning that global inflation has re-emerged as a major threat to the world economy...

The bottom line is that inflation is at a 10 year high in emerging countries and The Economist says that two-thirds of the world's population will probably suffer double-digit inflation rates this Summer. This is a huge deal and it explains why officials are concerned, but there's more...

It's still to be seen how this will end. But so far, this inflation rise is coinciding almost perfectly with the 200 year commodity cycle we've often shown. If this continues, and we believe that it will, then there's a lot more inflation to come in the years ahead.What's currently happening also strongly favors the outlook for gold and the other commodities. It's going to boost demand for gold as a safe haven during inflationary times and these ongoing developments are telling us to stay with our gold and precious metals positions.

In fact, gold's been telling us this all along. Now we're starting to see why.

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