If that happens, expect the usual suspects to ‘Go Postal’ on the hyperinflation narrative.
Johnny Bravo put it best when he said (to the effect) months ago:
We’re going to get hyperinflation. The question is “When?”
Looking at it a different way and in ‘Oligarch speak’.
The time for hyperinflation, is when the proletariat have exhausted their supplies of precious metals … most likely using it to buy food.
Judging from comments on the financial sites, the public still thinks food prices are rising because of inflation.
There are exceptions (thankfully) like the comment area on ZeroHedge articles. Those few but growing number, understand exactly what’s happening.
So, what’s all of this got to do with the price of gold?
It’s perfectly natural and maybe expected that gold, GLD, after breaking support will rally back to test the 166 (~ $1,660) area.
Just like the incessant narrative on “The Speck“, which is drilled into the collective consciousness day after day (except maybe in South Dakota and Texas) so too, is the hyperinflation Weimar Republic narrative.
A Black Swan (as explained by Nassim Taleb) is a major unexpected event.
The flip side, a Black Swan is also a major expected event, that does not happen. That second definition is not commonly discussed.
What if hyperinflation never happens? What if there’s some kind of ‘transition’ before it has a chance to take hold?
If GLD tests 166, and reverses, downside targets are now 133 and then even lower at 110.
If that happens, there could be a market crash to go along with it.
With margin debt levels the highest in history, most if not all participants will be wiped out long before gold at $1,100 (or lower).
Silver and gold at fire sale levels and the public will be on the other side of the fence, turning in their precious metals hoard in exchange for worthless fiat dollars … just to survive.
It’s an oligarch’s dream come true.
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