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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Tommaso who wrote (24288)1/9/2005 11:30:49 AM
From: Tommaso  Read Replies (2) of 110194
 
PCRDX puts capital into Treasury Inflation Protected Securities (TIPS). They use those as collateral for long positions in futures, options, forward contracts--whatever it takes to hold a stake in the commodities that make up the DJ-AIG index.

Now of course, if you are bearish on commodities, you definitely do not want to be in PCRDX.

Putting the money in TIPS provides additional income and inflation protection. I think we are going to have continuing commoditiy inflation, which is the inverse of fiat-currency depreciation.

There may be deflationary busts in real estate, used cars (SUVs especially), and certain other assets, but energy, food and raw materials are essential for the preservation of wealth, not to say life itself.
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