Michael Belkin continues:

“The markets are so overextended.  The markets have been going up since 2009, for almost 4 years now.  We need to have a selloff, that’s a healthy thing for the market.  The other thing I would like to say is sell rallies.  When the market is going up you buy the dips and the trend bails you out.

When the market is going down you sell aggressively into these brief, two to three day rallies that we’ve had, and that’s what I’m telling my institutional investors to do.”

Belkin also discussed government counterfeiting of money:  “I used to work for a top three government securities dealer, Salomon Brothers, back in the 80s and 90s....

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“How this works is the Treasury issues debt, the government securities dealers buy the debt at auction, and then the Fed comes in and buys the debt from the government securities dealers. That’s what debt monetization is.

So when Salomon Brothers bought $5 billion of the 2-Year Notes at the auction, and then the Fed came in and did a coupon pass and bought $2 billion of that, they credited Salomon’s account with $2 billion.  That’s counterfeited money.  That’s brand new, high-powered money.  I had some mentors that were former Fed officials so I have a pretty cynical view on this whole process.

...I think we’re in a 1987 scenario where interest rates go up, the bonds fell off, and the market gets shaken.  And then at some point there is a real turning point, I don’t want to use the word ‘crash,’ but a high volatility selloff in the stock market.  At that point, I think there will be a flight back into bonds and gold and gold stocks could have a huge rally ... First you have to have a deflation in asset values, and then you have to have a policy response that’s really pedal to the metal.

John Exter was a former Fed official.  He was my mentor.  He’s now passed away, but he quit in disgust.  He managed the Fed’s gold reserves in the  William McChesney Martin (Former Chairman of the Fed) years.  When they started printing money and he had to deliver gold over to the Bank of France and the Bank of Japan because we were on the gold standard, he just quit the Fed in disgust.  But what we have now is so far beyond that.

I think when they begin to print, after a stock market decline, and in the depths of an economic contraction, that is when gold and gold stocks could really have the next extended move up, of extreme high percentage gains, in extended duration.”

Belkin also added:  “Marc Faber is an old buddy of mine and he had me read a book called ‘The Economics of Inflation’ which is about the Weimer Republic.  It was written by an Italian economist who was there at the time.  That kind of environment where the price level goes up 100% to 200% a day, and where you don’t want to hold any kind of cash, we’re not in that kind of environment at the moment.  Will we get there?  I think so.”

The audio interview with Michael Belkin is tremendous.  He covers the global markets, economy, trading and investment moves, as well as what he is telling his institutional and high net worth clients right now.  The incredible audio interview with Michael Belkin is available now and you can listen to it by CLICKING HERE. 


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