Saturday, April 4, 2026 
Secular Outlook by Mohamed El-Erian of PIMCO.
“Last weekend’s drama in Europe is yet another illustration of this phenomenon. Policymakers are now forcefully using the balance sheets of the EU (ultimately Germany) and ECB to compensate for the debt excesses in the periphery (particularly Greece) and the related overexposure of European banks.”
As the previously documented sovereign event approaches, the uncertainty that remains draws me closer to the prosperity that will effect the collective consciousness of my readership connection. To further dissect the economic scenario that is playing out, I will offer some thoughts on where things are, what could cause things to reverse, as well as how to best prosper from the sovereign contagion that is spreading like wildfire.
Greece
In my prior post, I outlined the sovereign default risk that we face—somewhere, sometime soon. Several geographies are flashing extremely risky scenarios. Greece is in need of a bailout and they lay on the precipice of disaster if some aid is not found. Any proposal of aid I have seen will not be a solution, rather a band-aid on a broken bone. However, a band-aid could buy Greece some time–which they are in dire need of.
Ireland
Economic woes in Ireland are severe, and they are not being given the focus they require. Further trouble in the place where I kissed the Blarney Stone could be the impetus for the contagion to spread further, causing the market dislocation that I anticipate.
Dubai
Risk in Dubai is priced where it was at the height of 2009. Further trouble and inability to restructure will cause fallout in Dubai—which will affect Europe, which will effect Greece, and the dominoes will continue to tip. Last week in Dubai, I found money dealers paying extremely large mark-ups for physical gold. Indeed, rumors of gold being used as legal tender in Dubai are true. Again we see my thesis substantiated: the risk aversion trade here is not the US Dollar, rather the precious metals–gold and silver.
Spain: The Wild Card
All of the above geographies could stabilize, or with further troubles, could act as catalysts for the contagion to spread quicker than it already is.
I’d note that Spain was a large driver of contagion over the past two years. The housing bubble in Spain was by far the largest real estate bubble compared to anywhere else. They also face a severely high unemployment rate. However, even with all this trouble, spreads on banks in Spain are not showing the stress they should. When the stress of the housing bubble and unemployment rate percolates into Spanish banks, it will be easy for Spain to pick up where it left off. More in need of a bailout this time, Spain will contribute to the strain in Europe, affecting Greece, affecting Ireland…tip, tip, tip.
All That Glitters
Though the catalyst remains uncertain, the looming event is undeniable. Remember, when the entire universe lunges to take risk off the table in a reaction to what I anticipate, gold will stand, glittering amidst the debris. I’ve said it once and I’ll say it again: if you don’t own gold, you should.
And the beat goes on.
Dear Readership Connection,
Do you own gold and silver? You need to own it now. The move I have been talking about is very near. You must own it.
Question: What if I owned it, then I sold it? Is it time to buy back in now?
Answer: YES. Buy it now. It is the asset class with the largest percent gain potential. If you need to refresh the details, see my prior post.
Yours Truly,
Vincent M. Vega
editor-in-chief
Volatility News
Dated February 11, 2010
You're indestructible. You are gold.
Complex as it isn’t, my bankroll is positioned all over the world and the only one who really understands it is me. In reference to the public markets of late, we are approaching an important juncture. A turn is at hand. Given my data points, I need determine the best allocation of my capital to the assets that will gain in value most rapidly–I need appreciation and velocity.
Libertarian
In order to execute my trading model, I must stay true to it. In doing so, It is essential that I have no obligation to other people’s money (OPM). Since I am not paid by anyone to manage their money, my emotions are not tied to the performance of any monies but my own.
With sole trading discretion, I can take whatever risks I choose. As my model is not hindered by diversification, I can allocate all my capital to one thing, and I can go all in whenever I want. Nobody else has a say. With no limited partners, I am able to exercise my beliefs in Objectivism. I am held down by no management. My decision are derived like those of a machine: a robot with a heart.
Tony and I
Don’t ask the question—I already know what it is. It is sitting on the tip of your tongue, and you want it to hang in the sky so you can watch my reaction. But I’m not even going to let you ask. I am going to explain before you can claim your smug satisfaction.
“What about back in September when you wrote about running money for Tony Stark? What’s that all about? In some circles it is rumored that you are a money manager to superheroes and now up above you are claiming that you are not running OPM.”
Indeed, I do communicate with Tony as to how to allocate some of his assets. However, I am not paid a dime to manage anyone’s money—just my own—and I must keep it that way. Because I must stay true to my model.
What Does the Model Say Now?
Keep in mind that the trading model is not one of profit regularity and predictability. My model is one of relatively inconsistent bouts of extreme capital expansion. The dime bets that go to $50—tail events. Yeah, I’m that guy.
It is still my opinion that the largest opportunity in the years ahead will be trading gold. Gold is going to make an extremely rare and large move higher, and when it happens, it is going to happen very quickly. I have seen this movie before. Monetary policy has grown out of control on a global scale and gold is the ultimate risk aversion trade.
In my post the other day, I spoke of some tells that lead me to believe that there is a large move brewing in the markets. The situation remains the same. In fact, Dubai risk has widened even more.
The Currency Market
From my view of the money flows in the currency markets, I am seeing the carry trade moving away from the US Dollar and into the Japanese Yen. The Yen is the new carry trade.
Yes, the dollar has strengthened of late (chart below), but the recent strength in the mighty US Dollar is more related to carry traders re-arranging. Sovereign swaps on the US have widened enough to signal that the dollar will grow weaker as opposed to stronger in the not so distant future.
All Roads Lead to Rome—Again and Again
So here is the triangulation: there is a large move brewing in the market and the move is connected to a sovereign related event. Therefore, we should look to buy the asset that will appreciate most during a time of governmental stress.
During the crash of 2008, the best asset to own was the US Dollar. The dollar was the risk aversion trade. However, during the crash of 2010, the US dollar will not be the risk aversion trade. Let me explain. The stress on the horizon is sovereign related, but the demand we have seen in the US dollar lately is temporary. The asset, therefore, to own is going to be the ultimate safety trade, the one to which we always return: gold. (Silver will tag along.)
There is a large dislocation set up, and it is the opinion of Vincent M. Vega, editor-in-chief of Volatility News dot com, that the asset class to appreciate the most and with the most velocity is gold. Like the the Jackie O. trade of the 1970’s, it is time again. The gold trade is on. Be a part of it. History is in the making. Will I see you there?
And the beat goes on.
The Dollar Strength Will Fade
Q: Vinnie, if you think the environment is deflationary, why are you so bullish on gold and precious metals?
A: Inflation is inevitable, at some point. For now, prices are deflating. Relative to all the global money printing, there is a massive shortage of gold–which is why gold is so strongly bid here.
Gold is a buy buy buy and we are still deflating. At some point, inflation abounds. Imagine how high it will go when we hit that tipping point.
Like the 70’s, we are right smack in front of a 10x move higher in gold.
And the beat goes on.
It is my vision that, through meaningful work and collaboration, I can better myself.
Using my inspirations as a guide, I will produce things of importance, and open doors for those that believe in themselves, and build an immense store of energy.
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