adwebster . . . question, page-3

Hi Pug - Have the same thing happen to me sometimes....

Yep I am even more convinced of inflation. Previously I just figured it was always the preferred path for the authorities, as you know how good they are at taking the hard decisions. Now though it seems that the market is telling us that inflation is coming. Just pull up the charts of Oil, Gold, CRB, Copper, BDI, equity indexes etc. To me deflation was always the 'scare' or headfake in a way.

So what to do about it? Well firstly, lets remember that its not when inflation appears that it will begin being priced in, its when inflation expectations start appearing that it begins to be factored in and I think that is already happening (maybe a bit far to fast, but we'll see).

As for the money sitting on the sidelines, thats only very temporary (it would be back in in a week if gold dropped another $30-40). I'll be watching gold and long dated yields and recently they have clearly been telling us something, but I'm a bit cautious on that and I'll explain why.

Going back almost three months (March 9 in fact) things were pretty dire in the markets and especially for the big money center banks. I think the Fed & Treasury pumped the market full of cash (in a big way) almost like a 'great reflation' in an attempt to push up stock prices, in turn allowing their insider mates at the big banks to recapitalise at prices that wouldn't dilute their holdings too significantly.

The question now that the cap raisings are done is what next? Do they keep pumping, or having acheieved their short term aim, do they stop pumping for a little. I don't know to be honest (and this is what I hate, its my money but I have to guess what our financial overlords are going to do, whereas they know and put their money in the place to benefit from it - plicks), but 'm guessing the latter.....maybe..

Me, I'll be watching all the markets noted above, reading Bill Cara's comments daily and pouring over his Week in Review with a fine tooth comb. Personally I don't think there is any chance of avoiding inflation in the next 1-5 years. It will be used to inflate away all the debts and then maybe, after most debts are gone, someone might do a Volker.

Short answer though, my money wont be in cash long at all (1-2 months MAX) and a third of it's in GOLD.asx already.

Just my thoughts but hope they help.
All the best


p.s. The Chinese and others are buying up every hard asset they can get their hands on. That should tell us all what's coming down the pipe.....