There has been a long-term trend in major inflations and deflations. The numbers are 23 and 26 years. There is sufficient data that has survived even from the Temple of Apollo on the Island of Delos which was essentially the ancient world’s central bank. Just as we know there was a major default of some 13 cities, we also know there was a major real estate bubble between 314-290BC. The Temple rented land owned by Apollo. Land prices soared in part due to a rise in commodity prices caused by weather. The rally lasted 23 years as the commodity bubble burst in 290BC.
The opportunity for 2013 to be a watershed year is profound. We may see the 23 year low in Japan and that means the JGBs would collapse and interest rates will start to rise. A slight uptick in interest rates in Japan will devastate the Japanese banks. We may at last see people withdraw their cash and buy real assets including shares in the top Nikkei 225 companies.
We may also see a reversal in trend for Greece and France may turn into a good short. Watch out for gold. A year-end close below 1570 will warn we can still retest key support at 1435.