May 28, 2009
– Comments (6)
Guess I'm gonna need that wheelbarrow after all..
Either THEY really think THEY can control this thing or THEY really don't care. Sounds like a lose lose to me.
Rec 6 from me.
Faber ignores the history of booms and busts. Deflation will reign first. It could be double whammy where hyperinflation follows. Inflation only occurs where supply and demand are imbalanced. That "money" being printed is not flowing through the economy, so there are not more dollars chasing fewer goods and services. The current velocity of money confirms this.
Nearly everyone thinks inflation is certain and they will be shocked when deflation continues to its depths first.
Nowhere to hide other than putting as much of your wealth in gold, silver, and foreign currencies...
Deflation related to falling property values and rising unemployment is pitted against the inflation related to the devalued dollar from government printing and wasteful spending.
The US government has demonstrated its willingness to punish savers of US dollars in order to force them to spend money. Since deflation of real estate values appears likely to continue into 2010, moving your savings to something other than the US dollar seems wise.
I mostly agree with jesusfreakinco although I don't trust foreign currencies, since foreign governments may follow the US lead. I would invest in Gold, Silver (GLD, CEF), other commodities (food/fert) and Canadian companies via a stock mutual fund (FICDX). Some smaller energy and resource companies (PDS, CNQ) have had a nice run up in the last two months. I suspect that the above securities will hold up better than banks, retail, travel, entertainment and even technology stocks, although I still own AAPL.
The recent forclosure data suggests a further decrease in spending, which will likely become more evident in the fall, when retailers are again disappointed by a lack of holiday shopping. The stockmarkets may then replay the 2008 sell off, resulting in some potential buying opportunities (like when FCX dropped to $17 per share).
I am building a cash (gold GLD) position from some of my stock sales, in anticipaition of a fall sell off.
In Summary: Mixed Nuts.