The inflation beast is out of its cage: no going back now!!

News coming out of the United States, and this is hard to believe, but "inflation is not transitory".... And now the beast is out of its cage, things are going to get scary!

Now while I live in the UK, and i am currently being subjected to "stealth" inflation, ill mostly be concentrating on the USA, as its the USD$ that makes the world go round as the worlds reserve currency.

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Word on the grapevine is that central banks around the world, and particularly the US Federal reserve, are beginning to tighten purse string as we see inflation continue to rise, particularly in the U.S. and the U.K.. It has gotten so out of control. Only higher interest rates will keep inflation down, and on Wednesday we are expected to hear some big news from the Fed!!

Higher interest rates have been the go to fiscal policy to control runaway inflation, but i have a sneeky suspicion its too little too late. Think of this latest reaction as just putting a small plaster already over a gushing wound, and its just not stopping the bleeding!!

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In terms of inflation and its economic impact, investors who have confidence that the Fed, or even The Bank of England will be able to control inflation are mistaken. After the crash of 2008, central banks have used every trick in their arsenal to keep the "beast in its cage" to try and keep our current joke of a financial sysytem from completely crashing, but its too late now.

Quantitative easing, intrest rates at all time lows, helicopter money and a stock market so fill of funny money that thr only way is now DOWN! The spring has coiled so tight, that when it starts to uncoil, nothing will stop this!

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Usually, when intrest rates begin to rise "money" flows in to savings and bonds and out of gold and silver..... But in this crazy world, and through these extreme set of circumstances, i believe gold is about to explode past $3000 dragging its little brother silver with it.

Allow me to explain my thought process.... Whilst the smart investors have taking these all time low intrest rates to borrow and generate passive incomes, and invest in high returning opportunities, Joe Blogs, your average person, has just been scraping by. Theyve over borrowed and over stretched and while the intrest rates on thier mortgages remains low, the status quo is maintained.

The moment rates start to climb, i feel the very delicate housing sector could fall flat on its face,cas it should have been allowed to do in 2008! What is it they say - "kicking the can down the road"....

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If inflation continues to rise, people are going to be trying to figure out where they should invest their money. Once rhe low rate mortgages stop, and government handout are cut back, property prices will stop growing and even possibly fall... Property has been a big haven for investors for the last 30 years or so, and investors will be looking for the next sure bet.

Traditionally, gold has been a hedge against inflation. Whilst there is a common misconception that higher interest rates would impact the price of gold because supposedly people are borrowing money while intrest rates are low to buy gold which is totally not true...

I would not be surprised to see gold creeping above the $2,000 level in the next 3 to 5 months, with my one year outlook for gold being in the region of $2 200 per ounce. This also puts silver in a very strong position. I see silver following suit and passing $28, before shooting off an all time high of $50+!

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Time will tell, but for me, there is NO WAY to put the inflation monster back in its cage.... Its not too late to start diversify your portfolio and buying up some precious metals is, was and always has been a way of transferring one form of wealth from a crumbling paradigm to the next new monetary system.

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