Look, quantitative easing was considered to be nuts in 2008. I said back then that we would have quantitative easing. It happened.
We are going to have OMT. Probably in the next year, it is going to happen somewhere in the world.
The Trade
The trade is easy. Gold!
Some people are already starting to think about downside in the bond market, putting on steepeners, etc. When inflation strikes, it will hit the long end of the yield curve. I think that might be premature. Don’t get me wrong—OMT will probably result in the bond market going down in flames, but I would be surprised if that happened in 2016.
You probably have noticed that newsletter writers are seldom this explicit when it comes to trade ideas. I will cop to that. I am usually unwilling to really stick my neck out on a marginal idea.
I am more sure about this one. We spent five years contemplating tighter monetary policy (but not actually doing it, except for 25 bps at the end). Notice all the rate hike talk is pretty much over.
Two-thirds of investing is getting ahead of dumb policy. Free stuff—this is the easiest one in the world.
[Ed. Note: The author is long GLD and physical gold.]
Before I leave, I should remind you that today is the last day where you can get the Mauldin 3-for-1 Bundle (Street Freak, Yield Shark, and Over My Shoulder) for just $199. You save 75%, which I would say is a pretty good deal, so you might want to look into it.