Harry Schultz; Hyperinflation Will Happen Overnight

(snippet)

He writes in his most recent issue: "Remember my now-classic 20-year multi-faceted buying power 'V' formation? It's proven its worth so far. It's most unlikely to be totally prescient, but may be largely correct. Some thought, briefly, after the recent 12-month stock market rally and a few green shoots, that the 'V' would be broken. But things have returned to the pattern as so many events have occurred (including Greek financial explosion) -- which signal a fresh downtrend all round. Theoretically, not until 2017-2018 does the downward part of my 'V' end, and begin a positive, upbeat 10-year uptrend working back to where we were in 2007 ... reaching that level in 2028. We'll see. At least, you'll see. Maybe not me."

(After many years of being secretive about his age, Schultz has begun to complain loudly that he is "86.9." His dramatic prediction reminds me of an earlier "Market Methuselah," Edson Gould, who famously called the 1980s bull market which occurred long after his death.)

As 2009 showed, Schultz is capable of great tactical flexibility. But right now, all his flexibility appears bearish.

He comments: "Red alert if the S&P500 breaks below 1,035." (It closed Wednesday night at 1,056). On gold, he writes: "I said the next target will be $1,400. I'll stay with that forecast." Schultz says his eventual gold target is $6,000 -- the highest I've seen him mention.

One reason for Shultz' skittishness: what he sees as the extraordinary precariousness of the world financial system.

He writes: "We (collectively) are poised at a heart-stopping moment in economic times. On the one extreme side, the world is on the edge of massive deflation and depression. At the other extreme ... hyperinflation. My view is: Both these extremes are possible. Certainly deflation is, on balance, in play today and gaining ground as money supply is actually declining! Hyperinflation seems impossible when there is not much inflation in most economies. But ... hyperinflation is a monetary event, not an economic one, and will happen on an overnight basis, not via a general uptrend in inflation data."

Overnight?

Schultz added this late comment: "Meantime, as I write, gold is holding very near its high, as most stock markets are bungee jumping. This implies the unexpected hyper is pending, because if it were exclusively deflation ahead, gold action would be less buoyant.'

Schultz currently recommended asset allocation:

• 
  
  
  
  30-40% government notes/bills/bonds
• 
  
  
  
  8-10% stocks (non-golds)
• 
  
  
  
  10-15% commodities
• 
  
  
  
  40-50% gold stocks and bullion
• 
  
  
  
  0-5% bear stock-market protection via inverse exchange-traded funds 
  More Here..
  
  Obama's request for $23 billion to avert the layoffs of as many as 300,000 public school teachers has not won support in either chamber.
  More Here..