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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 454.29+6.4%Feb 3 4:00 PM EST
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To: TobagoJack who wrote (30780)3/11/2008 8:51:36 PM
From: prosperous  Read Replies (3) of 220012
 
TJ
Yes gold will do well with the bail outs, but the key is to realize that bet on gold is a bet on Fed being successful with the bailout effort wheresoever it may land us; yes inflation is given with that direction. The other key is predicting in what way this effort fails in the end game; its not clear gold will do well in the extreme scenarios when what Fed is doing stops working.

Considering that other central banks are doing the same thing, currency diversificaton would be a bet on asymmetrical failures of CBs policies which may come to pass depending on their reflexes and economic conditions at the point of failure and may help mitigate some of the investment losses; at this point its not clear if staying in govt bonds of a few countries (Ben Graham in Security analysis had suggested staying in short term govt debt to have avoided hit from great depression) is a better bet than diversification that includes market shorts+gold and other tangible equities since the end game scenario has too many possibilities.

Well the investors, whether they like it or not, are going to be forced to make a bet into risky assets with these policies, staying in cash being one of them. Basically what Fed is doing is now attaching huge risk to holding any asset so that the risk of holding different assets is indistinguishable in the hope that sheeple will move into assets that have crappy valuations at this time and bail those who benefited from them most.
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