After telling investors to relax about short term volatility last month, he explains why he worries about the time when the current asset inflation will give way to a serious asset deflation, which has to happen eventually.
The decline in the gold prices concerns him, as it could mean we are about to enter a period of asset deflation. He stresses 2 points:
- Uncertainty about the asset deflation timing. Most likely, different asset classes will deflate at different times and with different intensity.
- In a deflationary environment, financial assets (stocks, government and corporate bonds especially high yield bonds) would likely be the most vulnerable assets. That's why he can envision money flowing into a sound currency, and move out of fiat money. This is why he still continues to recommend the gradual accumulation of physical gold.
- “The Indian Budget & the Broken Window Fallacy” by Shanmuganathan “Shan” Nagasundaram. This report shows well-intentioned government plans may not have been as beneficial as thought, and it my have even hurt the ones it intended to help (poor people).