Simit Patel

An Investor's Guide to Hyperinflation

Thanks to all who took the time to respond. A couple of points I wanted to make in light of some of the comments:

1. Yes, I have made wrong calls before. I have never claimed to be perfect and in my opinion, any trader who expects to be right 100% of the time has a poor strategy.

2. With that said, you can see my trade record here: www.informedtrades.com... . I have posted double digit returns since 2006. While there is always room for improvement, my track record has outperformed most, and has beat the rate of inflation as well, thus generating net positive returns.

3. To say I have been dead wrong on all my calls, and that I am the ultimate contrarian indicator, is simply false. The primary call I have made since the beginning of this year is long gold/short 20+ year Treasuries. GLD is up 8.16% for the year with TLT down 12.92% this year. I have also been a big advocate of silver, which is up 21.52% this year. These have been my primary calls. Though I would not play Treasuries due to Fed intervention, I am confident that these trends will continue.

I post all my trades as I make them, and I note all my stop-losses, on my site at the link provided above. You can see my long-term calls on gold, silver, and Treasuries in my commentary on SeekingAlpha and on InformedTrades.com.

Thanks again for all the comments.

Economic Forecast and Best ETF Picks for 2009

Regarding my track record, my trading statement and my picks for ETFs are two different things. I was up over 20% in 2008 and over 30% in 2007. I stick to trading currencies and metals. I encourage those who may be interested in evaluating the validity, or lack thereof, of my analysis to read my other articles, and to see my trading journal at www.informedtrades.com where I keep a log of all my trades.

Time for Global Coordinated Easing

Great article Kathy! You're the best!!! :D

While I am anticipating the Fed to cut -- Fed funds futures are already pricing in a 50bps cut -- I think it would be a terrible move economically, and will only result in dragging out this bear market for a longer period of time, just like the Fed's interventionist policies in the late 20s early 30s dragged out The Great Depression. The government's non-stop interventionist policy is preventing the market from undergoing a natural contraction after Greenspan's follies created an overexpanded money supply. Further inflation of the money supply will only exacerbate the problem.

But yes, looks like a rate cut is coming, and looks like USD short is in the cards. USDJPY is the pair to short, though the gold rally is just getting started....

John Hussman: Depression Fear Mongering 'Ridiculous'

No, the Depression talk comes largely from people who saw this whole thing coming a mile away. Just as the Fed's overly lax monetary policy created the Roaring '20s, and then its interventions and inflationary behavior exacerbated the problem instead of preventing the necessary credit contraction the market said was necessary, so too is this story the same: Greenspan's Fed created the tech bubble and the housing bubble, and now Bernanke is intervening to prevent the necessary contraction, thus making the problem worse.

History does indeed repeat itself.

Bailout Bill Passes; What Happens Now?

the federal reserve's behavior is clearly inflationary. as for the notion that they cannot force banks to lend, who says they need to go through banks? bernanke's helicopter nickname comes from his willingness to resort to more direct measures. congress, acting on behalf the public, can surely pass a law to do just that, regardless of how ill-advised that law may be.

the outlook is clear. the US' depression is looking more and more like Argentina's with each passing day. Sell your dollars and invest abroad and in precious metals. More importantly, be prepared for the cultural chaos that comes with a depression (inflationary or deflationary).

Are We at the Bottom Yet?

I have to agree with the aforementioned comments. Also, it is worth noting that fundamentally, nothing has changed. If anything, I'd argue the problem is just beginning; the US government cannot afford the bailouts, which means that it is going to fund these enormous bailouts by printing more money via the Federal Reserve. This will result in dollar devaluation, aka inflation, which is going to further fuel a decline in many financial markets as well as putting pressure on consumers who are already being overstretched.

The dollar devaluation is, in my opinion, the real story here, and is at the heart of the economic issues. That issue remains critical and is intensifying if anything. I would expect the issue to remain for at least a few more years, aside from momentary strengthening like what we are seeing now.