gold has topped, page-2

Good post ctindale - good to see some contrarian analysis on this thread.

Bold move to call it in 3 months though. Time frames make fools of all prognosticators!

In general though - I think it's too hard to call. There are significant counter arguments to your view.

Deflation is a problem chiefly for exporters and countries which have been prevented from further borrowing - like ireland. Too early to say whether deflation is really taking hold in the US. Headline was negative... but stimulus is now started to be felt. UK cpi is still at 2.3 percent.

So - deflation is still specific to particular circumstances of each economy.

It's no surprise that deflation is a problem for exporting countries - particularly the asian. They constitute the source of the world wide savings glut. They were too scared to invest in their own economies after the asian financial crisis and so dumped all their savings overseas. That was fine while the west bought their goods - but that's all changed now. Hence surplus production capacities in those countries causing the deflationary environment. Asian consumers are starting to realise that they'll have to pick up the slack - and there is already some evidence that china is making headway in this respect.

As for western economies - governments around the world are refusing to allow de-leveraging. So that makes true deflation very difficult. This sort of thinking is behind Roubini's L shaped prediction - since he believes that the failure to de-leverage will keep banks from properly re-capitalising. But it will likely prevent massive asset deflation (which can sometime feed into cpi deflation but not necessarily).

I used to be squarely on the inflationary camp - but now feel the issues are too difficult. I'm wait n see.