I want to figure out something fundamentally from the many minds here that I think are pretty bright.
I'm of the mindset that keeping interest low for a prolonged period of time signals deflation is the biggest concern.
If deflation is the biggest concern it seems that institutions should be selling the market and all things should see lower prices including commodities to reflect that.
First I want to know if anyone agree's with that and second, what is the single best deflation play? I know about gold, but i suspect if deflation really takes hold, the price of gold will fall too, it's just that it won't fall as much as everything else.
For me oil above 100+ can't be good for
economy's world wide. That's not to say
we won't see 110+ in 2012.
so for now i look at 93-95 to exit if
the market allows that black gold to get
This is only a short term trade for me
not a long term investment
good luck to all
Hi John - So much for my statement about SCO not doing well as long as the S&P continues to rally. Oil & stocks have decoupled today....good for your SCO. It'll be interesting to see if today is an aberration or if they start to move in lock step again tomorrow?
Without government interaction, we would have had deflation a long time ago. However, the government won't allow it. If there was deflation on the horizon, the best play would probably be leveraged short commodity ETFs, because commodities usually fall the fastest.
>>what is the single best deflation play<<
That's easy Chemaes, they teach you that in home economics. :)
Buy fixed rate bonds. Since bond interest payments remain the same throughout the life of a bond, their purchasing power increases as prices fall.
Commodities are being propped up by the devaluing of the dollar. China, which is still in a growth stage, is helping to prop up commodity values. The low interest rates are the attempt to increase inflationary pressures to balance the deflationary pressures from recession. Since they have lowered interest rates to as low as they will go, the Feds are pumping out dollars to deflate the dollar some. The raising of interest rates will begin when there are real economic and inflationary up-trends starting.