Masses are always wrong in the long run, this is clear. The masses expect inflation (along with higher interest rates), so we'll have deflation with low interest rates instead. By the way there's already deflation in the housing and job markets.
no...the masses on HERE expect inflation. When I try to talk to "normal" masses of people about inflation, they all look at me like I am crazy. I am at the point where I am really careful not to discuss inflation with regular people. I always have to feel them out first to see if they have any clue about what is going on. (which most dont). If the masses expected inflation, people would not be selling their gold at these "cash for gold" places that give them 20%-40% of spot rate for their old gold jewelry.
Well, I'd attribute a significant percentage of the cash for gold sales as folks on a fixed income who have been royally screwed by this ZIRP policy. How many people do you think are going broke because they cannot earn a dime in interest, all the while their cost of living is increasing and/or they are unemployed. There is quite a bit of forced liquidation that is missing from your analysis.
http://www.professorfekete.com/articles\AEFCanWeHaveInflationAndDeflation.pdf "However, Fekete says that the government cannot physically print enough paper money in relation to the âelectronic dollarsâ it created at whim. These electronic dollars filter through the banking system and lead to increased credit. However the real paper money becomes less plentiful in comparison and people will hoard it, because itâs value increases."
Halfway there. The masses are always wrong. They expect inflation. They are buying gold hand over fist.
The idea that all you have to do to win is guess which way everybody is leaning and go the other way is ridiculous. Nice trading strategy