Cesato

If Bear Market Rally Unfolds, Diversify Risk

You are right, the money hasn't hit the market yet but it's there in Governments' vaults. GoldMarketPaul made a point regarding Japan but the USA does not have a short term memory. As soon as the money hits the market and people feel good, not because they are back where they were before but because they will not be as bad as they are now, consumption will irresponsibly resume, as usual. Add supply destruction to the equation plus increase in Money Supply and you have the perfect scenario for inflation. If you are in precious metals don't wait for the first sign of inflation (probably months away)otherwise it will be too late, remember that Gold in particular is a leading indicator, however don't fall in love with your physical holdings, in real life anything may happen.

On Mar 13 08:20 AM Andy1234 wrote:

> I am not sure how to view the deflation/inflation argument for the
> short term.
>
> Most of the money created to get inflation is lending by the banks.....and
> money being pulled from home equity....and house prices increasing.......which
> opens up more lending...etc.
>
> I just don't see house prices increasing anytime soon....in fact....I
> see more declines ahead (Alt-A and option ARM resets)......so I understand
> the government is printing money like crazy.....but the banks are
> lending. And the only way that money gets to the public is through
> loans....correct? So if they aren't loaning....the money just sits
> there. I am split on the deflation/inflation call on the short term.....definitely
> have inflation long term.

If Bear Market Rally Unfolds, Diversify Risk

I agree with paulaut, did we not hear the same argument when Dow hit 7500 last year? Nobody has a workable crystal ball at the moment. If the article suggests a buy, hold, get off breakeven on a reversal and wait, then agressive investors could try the bull instance considering than being cash is not giving us any return anyway but this kind of calls are somewhat irresponsible. Let's see what the earnings season brings us, although there are very attractive bargains out there the crisis has not hit a credible bottom yet nor will it anytime soon. Do you see why people are still extremely bullish in Gold and Silver?