iknoknot

Gold ETFs: What Went Wrong With Conventional Wisdom?

deflation? sort-of.

the best I can articulate the problem I have with the current 'deflation' perspective isn't in the existence, but rather the transience of "value-drop" based deflation. This in contrast to the very permanent injection of massive money into our financial system. So, for me the inflation question therefore becomes one of "when", not "if".

We all read that 700Billion is a huge influx of cash and the dollar is "toast". 700Billion is in the *noise* in this game, but the real background dollar prop-ups that are going on in the trillions are not. That real (albeit devalued) money is being pumped in, to replace the flow that is 'lost' during this confidence-based 'sell-off'. Once put in the system, it won't (can't?) be pulled back out.

In contrast, while the lost value in stocks, home-value, bonds, etc. is *very* real to anyone being forced to liquidate or retire *today*, I believe the better part of that value *will* return with the return of confidence in the market.

Of course it will take longer to return than it took to drop, and all indications are that it will take years this time rather than months. But here's the rub for me: when that 'deflated' value returns, and the current FED trillions don't go away... inflation - by any definition.

My personal basis for this thinking is the fact that I have cash, and am waiting to buy. Not before the bottom, but just after it... (crystal ball anyone?)
Even if I miss it, my confidence based re-insertion into the market will be joined by many others, and the market will hobble back upward.

Housing is the same. My associates in Real-Estate say they have buyers in the wings, waiting to be sure they don't buy "too soon". As soon as that curve is felt to have switched, those buyers will jump in, hoping not to miss the window.

Warren Buffet says now. I guess he can afford to lose more :^)

I don't know how to resolve the losses that were created by layers of leverage that has collapsed, which seems like vaporized value, but my bet is that all that cash we're sitting on will go back into the rising numbers when we think it will be safe. One value stock at a time.

Years or months - that's my question. watching watching watching.

best of luck out there!

--ikk