And now IT begins.

What exactly is "IT?" It is STAGFLATION, first experienced during Jimmy Carter's Presidency. I have already posted on the Raging Bull, how these concepts relate: first comes DEFLATION as shadowy regulators changed the accounting system to 'mark to market,' declaring many financial instruments worth zero and thus bankrupting banks and financial institutions. That was done to stop money circulation (Sept 15, 2008) and elect Barak Hussein Obama as President. The deflationary phase was continued to nationalize GM and Chrysler, the mortgage industry, student loans, and a good chunk of the banks. The nationalization of medical care was done via legislation. Bankrupting of insurance companies is in the works, forcing everyone into government-run medical care. The bankrupting of the power companies and a lot of industry awaits the passage of "Cap and Trade," which will put a large tax on using carbon-based fuels and transfer the capital to third world nations. The Obama regime and its Democrat base intends to put people on unemployment, our current version of the CCC camps of the 1930s.

To accomplish this, the regime had to "print" money which caused monetary inflation. I have described how this printing works - it is called "quantitative easing.'

Monetary inflation means that more money is around with no increase in what it can buy. Thus, the value of the money (dollar) decreases. Along with the drop in the value of the dollar, the price of gold and silver increase, as do the price of commodities (beans, wheat, meat, etc) and other metals besides gold and silver. And of course, oil.

Monetary inflation turns into price inflation as the price of commodities increase, even if deflation continues.

I will now review the evidence.

The economy has slowed as the regime's stimulus becomes less effective and as the regime's policies discourage investment in the economy. The regime's apologists trumpeted a "Summer of recovery," but instead of that, we saw the beginning of STAGNATION. Growth was forecast as 3.5%, but it was revised to 1.5%. Then it was revised to 1.6% and celebrated as much better than expected. STAGNATION IS HERE.

The first graph shows the price of gold. The rise in gold prices is obvious. Gold reached a new record price of $1,320/oz last Friday. The rise in silver was even more dramatic and it closed at $22.10 on the CRIMEX. (No graphic needed to dramatize the change from $18 to $22/oz silver).

The next two graphics show the drop in the value of the US Dollar. You can see the closing of the Dollar below its previous low. The third graphic down shows the breakdown of the head and shoulder formation in the value of the dollar and predicts the Dollar to fall below 72 on the dollar index. The current value of the dollar is 78 on the index.

The fourth graphic is the price of crude, oil that is. You can see an upward bias in higher highs and higher lows. The fifth graphic shows a similar pattern and clearly indicates that oil has broken out of its recent pattern on the upside. Note also that smart money is buying up oil contracts. Oil price is forecast to hit $95 by Christmas. The regime wants higher prices.

Finally, what about the Stock Market? Accompanying the yet secret quantitative easing by the FED, the Stock Market is also breaking out. The next to last graphic shows the formation of a new "golden cross," the crossing of the 200 Day Moving Average by the 50 Day Moving Average. The last graphic shows the breakout of the Industrials from a reverse head and shoulder formation. This forecasts higher stock prices.

Summary. The Markets are now in sinc. The slowing of the economy enters us into STAGNATION. Monetary INFLATION is shown in the continued rally in gold, silver, metal and commodity prices. Price inflation is still down the road, but it has begun. Everything is being recalibrate in the terms of a cheaper US dollar, even stock prices (which are rising as the value of the dollar drops).

Putting this another way, stock prices are decoupling from the economy and are now driven by the falling value of the US Dollar. PRICE INFLATION will now increase. Finally, the stage is set for another round of increases in metal prices lead by silver and gold. The panic phase in gold prices should occur in 2012, but we should have substantially higher gold prices in 2011. In the panic phase, gold miner stocks should decouple from the gold price and go into the stratosphere.