European yields fall, investor euphoria suggests Europe has turned corner: NOT. But perception is 90% of the market. Gold finally broke 200 day MA decisively yesterday and promptly added another $25. Should be some resistance around the $1,670ish area. Europe’s Tarpe program and the suggestion that there may be a solution to the US housing issue, which is a big drag on US growth, has encouraged investors. If the cycle plays out, this “may” create the background for the final bull leg in the market. The inflationary leg. This leg may run as long as two-three years and if it materializes, the blow-off stage at the end of the leg, will create prices much higher than many imagine possible.

The risk however continues to be deflation and recession in Europe in the short term 3-6 months.