In a recent article I wrote, “Gold and silver could gap higher by the end of 2014 and the top notch juniors could skyrocket.” I expected a breakout at $1205. It appears gold may be breaking that downtrend today.

For a couple of years metals were knocked out of favor and now oil is on its knees with a major three month deflationary selloff that came out of nowhere. This black swan may be due to increasing tensions between the West and East.

Japan and Europe are turning on the printing presses to prevent deflation causing investors to flock to US dollars and the S&P500.  Don't be so quick to chase them into the overbought markets.

The Fed needs to see more inflation and a cheaper dollar before raising rates. Once investors wake up and realize The Fed can't tighten in this environment, the dollar parabolic rise will pop. Once the dollar rally fizzles out investors should once again return to the beaten down junior gold and silver sector which is testing 2008 Credit Crisis All Time Lows.

Remember we are in tax loss selling season and the time to buy discounted junior resource stocks is over the next 3 weeks. Since we are at such a low base the January effect could be quite powerful.

Cash is now king as other nations are following Europe and Japan beginning a major fiat currency war. The Russian Ruble is crashing and now the Russian economy is entering a major recession possible depression. What we are seeing with increasing tensions between the West and Russia and China and Japan are trade wars.

History shows that these policies lead to economic crashes which the metals and oil may be forecasting. These deflations could be followed by hyperinflations as governments resort to currency devaluations through quantitative easing.

Consumers in the US may be excited to see gas prices under $2 and their inflated retirement accounts, however these low prices could cause a ripple effect throughout the entire global economy.