Felix Zulauf Interview on Financial Sense Newshour

As I mentioned just a few days ago, Felix Zulauf is among the macro strategists that I didn't know and who surprised me by his sharpness and the quality of his analysis.

Interestingly, Felix Zulauf was Jim Puplava's guest on the August the 11th on Financial Sense Newshour.

Felix discusses the credit mess in Europe, and the insolvency of several of the European unions. Selected points:

• He have now a slow motion bank-run in Italy.
• Angela Merkel has a communist background and doesn't understand the market. She has no ideology anymore and the only purpose that she has, is being reelected.
• QE does work on financial assets but cannot work on the economy.
• I think we are at the beginning of the recognition that the forecast of growth acceleration was wrong and that instead of a strong growth, we are probably going to have a recession.
• France will become a problem. The numbers coming out of France are wrong.
• Markets will continue to drop until governments (and central banks) start to act again. But government will not be able to come with the structural changes that are needed but will only come with short term patches.
• The prosperity that we have experienced since the late 1970's was built on accumulating unseen amounts of debt. It was a fiction.
• Only after a number of years of deflation, will we go into hyperinflation. It will be very messy, very painful.

Unfortunately, he also exposes some of his dark sides by suggesting that governments must provide fiscal stimulus and economic stimulus by doing infrastructure work. Sadly, Keynesian BS is very widespread.

Link to the full MP3 file.

Two Gems Found in a Pile of Garbage — Felix Zulauf and Marc Faber Interviews on KWN

Before I start, I wanted to apologise because this post starts by a big rant, and that I got really emotional after listening for these interviews the whole afternoon, playing catch up.

King World News — KWN as they call it — is a well known lair for crazy lunatics forecasting gold 5 digits, silver $300 or $500 and talking about hyperinflation.

Listening to these interviews make me lose a lot of hair as the likes of John Embry or Eric Sprott are stunningly ignorant of the monetary system and the inner working of financial markets. Generally speaking, any of the people interviewed come with never lower than +100% on any forecast, but it's better if the forecast is about quintupling or more.

Unfortunately, even people I highly regarding have came up to become very disappointing, such as James Dines — Mr. "You've Heard it By Me First", Mr. "I'm the original gold bug". Not only was he happy to discuss about Hyperinflation in the US, but he also did say that at this time, he was the first one to forecast it, and that they heard it for the first time just now — link to full interview as MP3.

So how refreshing was it when I heard Felix Zulauf — on the 16th of July — on this 20 min long interview — link to full interview as MP3 — discuss his opinion the following point — dismissing most of the ridiculously biases questions that Eric King asks him:

• Gold, gold stocks and mining shares.
• Deflation (and not inflation) is what we're going to see — answering King's question about "the ocean of money that is printed" and the "Weimar republic like inflation that will happen in the US".
• The consensus of economic acceleration after this soft patch is all wrong. The whole economy will be in recession by the 4th quarter.
• Was expecting the market to tumble to 1,100 by end of summer (wow! that's exactly were we are at the moment).
• The bond market to make a new major move, to new lows, in the 2% for the 10Y (wow! exactly what happened!) although he doesn't mean that someone should go and invest in long term bonds for the long term.
• The US dollar could look strong for a while [...] The USD will look good during the next 6 months or so — I'm expecting this to happen, it's time he get this one right as well.
• Quote: We are not there yet. The situation of highly inflationary policy in an environment of extremely deflationary pressure by too much debt in the system will continue to keep the CPI at a benign level and interest rates at the very low range historically speaking. It could last for year. It's only later that inflation could happen. — And then Eric King talks about the 1970 and massive inflation again... Deafen by his greed for gold, unable to see or hear the reality around him.

I will definitely follow Felix Zulauf from now on. What a great mind. I'm not sure he'll get invited on this show though.

Next is Marc Faber — link to full interview as MP3 file — who I very much respect, and is one of my heroes, even though he get the inflation-deflation debate from the wrong angle — only equal to himself, it's a very interesting interview and makes  a strong case about investing in gold bullion instead of gold shares. Something many of the crazy lunatics interviewed on KWN do not understand and keep on forecasting a doubling or tripling. I won't discuss into as much details this interview, but I recommend listening to it anyway.