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Strategies & Market Trends : Heinz Blasnik- Views You Can Use
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To: NOW who wrote (2034)6/1/2003 10:43:47 PM
From: EL KABONG!!!  Read Replies (3) of 4904
 
tooearly,

Just for the purposes of debate, let us presume that deflation does indeed become problematic for both Germany and the United States. What then would become the ideal investment portfolio?

Equities, in theory anyway, would likely deflate with the currency, and dividends would likely cease. Debt instruments would run the extreme risk of uncompensated default. (So much for the orphans and widows!)

I've seen people proclaim that gold (and other precious metals) would become a "currency" of last resort, and these same people expect gold to at least hold its own value, if not outright appreciate in value. Why wouldn't the value of gold deflate along with everything else?

I've also seen the old "stash it in the mattress" proposed, under the presumption that cash tomorrow would have a higher buying capability within a deflationary environment. Don't even think about putting the mattress cash in the banks (credit unions, insurance companies, etcetera) because of the risk that the financial institutions might fail.

Some people propose stocking up on consumer non-perishables, presuming that shortages will develop in a deflationary environment.

So, where to go and what to do in an deflationary environment. Anyone got any ideas here?

KJC
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