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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (50184)	1/19/2006 10:40:03 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

What deflation plays have worked for me? Gold Gold is a deflation Play Mish

To: TimbaBear who wrote (50184)	1/19/2006 10:50:17 AM
From: Chaka	Respond to of 110194

What deflation plays have worked for you personally? Zero-coupon treasuries have been on a roll the last few years (see hoisington - average gains of ~20% annualized). Some claim low yields is all thanks to Foreign Central Banks but FCBs hold mostly short-duration bills (80% of holdings less than 5 years). Applying the OCCAM's razor, the simplest explanation of lower treasury bond yields is lower inflation/deflation ahead thanks to globalization (all bets are off if there is a trade-war - then inflation is definitely the right call). Yes, the US currency has stiff headwinds but the world is not ready to accept a lower USD just yet based on past history (China will not revalue aggressively and Japan will defend whenever Yen approaches 100 to a dollar). Hoye argues, based on his reading of world's 500 year history that, during tough times, the senior currency has always strengthened. Comparing the US to banana republics is laughable - yes, there is mismanagement but when there is a crisis, where would you rather store your wealth? China?? One middle ground between inflation/deflation may be Coxe's view - deflation in things we can grow/produce, inflation in things we can only extract. So oil/metals may continue to be a good play.