I am listening to an analyst talking about inflation being under control: "you're starting to see global slowing in most of the economies"... "the inflation everybody's worried about is strictly centered around oil and not all of the other produceable items"... "so you've got energy and food, yes but a lot of the other components that we see that are normal and in inflation numbers (?) ah, we don't see high levels of inflation and certainly we don't see it in wages; at least here in the United States. With the unemployment numbers today wage growth was very low and on a year over year basis you're still running at about 3 - 3 1/2%; not the inflation spiral numbers that we saw in the early 70's"... "so we think inflation still is under control in general"... "we still have food and energy inflation but we think the economies of the world will be slowing down as consumers ratchet backwards a lot of their spending because they can only spend so much of that pie"

This is the heart of the matter. Most of the world thinks of rising wages and rising prices as inflation. But of course these prices are really the result of the supply/demand dynamics of money. That is the heart of our current deflation scare; many people are already afraid of deflation and when oil finally breaks, many more will be as well. But the key to surviving and prospering through the deflation scare is in the realization that the prices of everything that the masses are getting hysterical about now are the results of the inflation that Sir Prints-a-lot promoted years ago. The 'deflation' in housing is simply the effects of Greenspan's previous bubble cycle wearing off. The same will probably happen in commodities, including oil. But our secular trend is one of inflation and currently the US Fed is pursuing a whopper of an inflationary policy as they are stuck between a rock (Greenspan's short sighted policies) and a hard place (the meltdown caused by same) as it is really their only way out - and it ain't much of a way out, now is it? It is just politically palatable in the short run.

Gold at 2000/oz. within the next 2 years is not only possible, in my book it is all but a done deal. First we will contend with the flight of the rampaging commodity bulls as they adhere to the mainstream thinking quoted above and that may ding gold. But the financial policies the Fed - and soon global CB's - are shoe horned into are going to be very bullish for the monetary metal because inflation is really (funny) munny supply on steroids and the declining prices that result from a slowing global economy near you are just what are need to make the world cry for more inflation.