Big inflation is on the way, plus a look at silver and what stood out to me the past two weeks.
Big Inflation Is On The Way
January 2 (King World News) – Graddhy out of Sweden: This chart is very clear – BIG inflation is coming.
KING WORLD NEWS NOTE: We Are Living Through A Frankenstein Version Of The 1970s – Much More Violent. Massive Inflation On The Way.
And it most probably involves oil going much, much higher.
And that in turn is often what sets off recessions.
This inflation vs deflation index chart below was in a blue range for eight years. Then it broke down for a very probable blue false breakout, which it was. Then it broke out above the pink bullish falling wedge, which reversed the downtrend, and which I posted on in real-time.
Getting prepared for a 2nd inflationary wave is now imperative.
And, following the right people is therefore as important as ever. You can miss most of a bull market by following the wrong people. For example, were you following the right people during gold & silver’s huge up-move last 24 months..?
Silver, And What Stood Out To Me The Past Two Weeks
Peter Boockvar: I wish for you a happy and healthy 2026 and let’s get this started.
Full disclosure, we did trim some of our silver position last week due to the vertical move. My readers know we’ve been long and bullish precious metals for the last bunch of years.
With the stock and bond markets chopping around over the last two weeks, the biggest market behavior that really stood out to me was the strength in the Chinese yuan which is now trading at the highest level vs the US dollar since May 2023. It’s higher for the 9th day in the past 10.
Keep in mind that this is a loosely pegged currency with a band that when it moves it’s mostly because the Chinese government wants it to in a particular direction.
It’s thus clear that this strength is both tolerated and wanted likely due to their desire to address their $1 trillion trade surplus and give their consumers more purchasing power.
What this move also does, assuming it lasts, is give me more confidence that 2026 will be another year of US dollar weakness and that will now spread more to the Asian currencies which weren’t up as much vs the US dollar in 2025 relative to the euro, pound and other European and Latin American currencies. See the chart below of the Bloomberg Asia Dollar index where 46% is in Chinese yuan, followed by allocations to the South Korean won, Singapore dollar, Indian rupee, Taiwan dollar, Thai bhat, Malaysian ringgit, Indonesian rupiah, etc…
If I’m right about a broadening of dollar weakness, our position in local currency emerging market bonds should do well as should international stocks, again which we know had a big outperformance year in 2025. What could also happen is long term US interest rates could inflect higher again as foreign fund flows avoid a weaker US dollar and the same can occur with foreign buying of US stocks. Foreigners continued to maintain a strong pace of US stock buying in 2025 but did so with a heavy pace of dollar hedging relative to prior years.
By the way, the Bank of Korea Governor Rhee today expressed his unhappiness with the weak Korean won. He said “While it is difficult to identify a precise appropriate exchange rate level, the recent rise into the upper 1,400s appears to be substantially misaligned with our economic fundamentals.” A rise means weakness vs USD. We know too there is growing pushback within Japan to the weaker yen and the Indonesian central bank has kept rates high to help stem the weaker rupiah.
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