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As I warned before, stocks are due for a pullback.

This is nothing to panic about… pullbacks are normal and healthy in the context of a bull market. And in point of fact, this bull market likely has much further to go before it finally tops.

Why?

Because stocks are an inflation hedge (to a point)… and central banks have no choice but to “inflate away” the debt in the financial system. This means devaluing their currencies through artificially low interest rates, while also printing money.

The end result?

Investors sitting on cash are eventually forced to move into risk assets to maintain their purchasing power. And there is a LOT of cash on the sidelines today.

As I write this, over $7 trillion in sitting in money market funds. I’m not suggesting all of this will be moving into stocks… but do you really think people will continue to sit in cash once a resurgence of inflation hits the financial system?

(Click on image to enlarge)

This process is already underway as stocks, gold and bitcoin recently hit new all-time highs. And that’s BEFORE the next round of inflation hits! What do you think will happen when inflation rips back into the high single digits (or God forbid, the low double digits)?

I’ll tell you: a Global Melt Up during which stocks, gold and other risk assets hit truly RIDICULOUS levels.

So, I would view this current pullback as a “breather” before risk assets begin their next leg up. Are things starting to bubble? Yes. That’s the point, the Fed and other central banks WANT a bubble because it gives them the “green light” to continue printing money (voters only start to freak out about things when wealth evaporates during bear markets, e.g. the high inflation/ bear market in stocks in 2022).

So, you NEED to take advantage of this while it lasts. Because once this bubble bursts, the coming crisis will destroy trillions of dollars in wealth.

More By This Author:

Stocks Are Officially In Bubble-Territory
Why Warren Buffett Is Wrong About Gold
The Stage Is Set For The Greatest Asset Bubble Of Our Lifetimes