Zachary Scheidt

Don't Miss the Coming Gold Bull

Much has been said about the AMOUNT of money flooding the US economy but as you alluded to, the VELOCITY of that money is equally important. The government can pump capital into the financial institutions, the automakers and even directly to consumers, but until that capital is put to work, it doesn't have much of an effect.

But the rub is that when the velocity actually picks up (banks start lending, treasuries expire, consumers spend) the inflation will hit HARD and QUICK. All of the sudden the billions and even trillions that have been pumped into the economy and have sat dormant become alive at once. The Fed could find out that it is much more difficult to REMOVE stimulus than it is to implement it.

So at that point, inflation will be very dangerous and gold will become valuable nearly overnight. I think we need to be careful about being lulled to sleep by discussions of deflation or the new sophistication of monetary and fiscal policy. We should see a sharp increase in inflation in 2009 and investors should prepare accordingly.

Thanks for the good article!
Zach
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